Real estate is dominated by REITs — companies required by law to distribute most of their taxable income as dividends, making it one of the most income-oriented sectors in the market. The primary enemy of REITs is rising interest rates, which both increase borrowing costs and make yield less attractive relative to bonds. When rates fall, REITs tend to outperform significantly. Property type matters enormously within the sector: industrial REITs owning logistics and warehouse space have been structural winners from e-commerce growth, while office REITs face ongoing headwinds from remote work normalization. Occupancy rates, lease duration, tenant credit quality and debt maturity schedules are the fundamental metrics to monitor. For investors, real estate offers attractive income, inflation linkage through rent escalations and long-term property demand exposure, balanced against meaningful rate sensitivity.
