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It was only the second year since we've started tracking the data that the variance in performance was wider by sectors than by countries. The sector variance between best and worst performing sectors was 40%, i.e. 9pp larger than the historical average, while country variance was "only" 32%, i.e. 23pp lower than the historical average, during the world's biggest election year in recent history. REITs globally adapted to higher interest rates and maintained resilient balance sheets and operating metrics throughout 2024, however the global real estate index returned only +1.6% in 2024, giving up most of the gains in the last 3 months as US 10-year bond yields rose 77bps. The US, which was the strongest region in most of 2024, was -7.4% in December on Fed rate jitters. In the US, we expect 2025 to kick off with transitional volatility and favour companies with high-quality portfolios in subsectors with strong visibility into demand trends. In China, we recently published our outlook with 5 key themes and expect destocking to continue into 2025, potentially ending by mid-2026.

Healthcare (+21.0%) and Specialty (+18.7%) were the best performers. Industrial (-18.4%) and Diversified (-5.9%) performed the worst. By region, Japan Devs (+14.2%) and Australia (+10.5%) outperformed. UK (-11.7%) and Hong Kong (-10.8%) underperformed.