Real Estate Investment Trusts (REITs) in 2026: Adjustments in the real estate market and their impacts.

The real estate market is susceptible to adjustments that could impact the performance of REITs (Real Estate Investment Trusts).

The Real Estate Investment Fund (REIT) market is booming. However, before investing, it's important to understand that it's also subject to adjustments resulting from changes in the macroeconomic environment, such as interest rates, inflation, mortgage lending, and the dynamics of supply and demand for real estate.

In 2026, these adjustments could impact specific segments of the sector and the performance of... real estate funds, thus influencing metrics such as yield, vacancy rate, share appreciation, and liquidity.

For investors, understanding these movements is very useful, as it allows them to analyze the risks, opportunities, and possible allocation strategies in different types of REITs (Real Estate Investment Trusts). In this article, we will show how adjustments in the real estate market can influence investments.

While informative, this content is not investment advice.

How do interest rate and inflation rates influence REITs (Real Estate Investment Trusts)?

Interest rates and inflation directly influence the performance of REITs (Real Estate Investment Trusts).

When interest rates rise, fixed income investments start paying more, so the opportunity cost increases and some of the invested capital migrates from REITs to government bonds and Certificates of Deposit (CDBs). This puts downward pressure on share prices.

In the case of real estate investment trusts (REITs), this movement is more pronounced, since there is a strong negative correlation between interest rates and performance, because rental values ​​fall and mortgage credit becomes more expensive. The result: less demand and occupancy.

Paper-based funds tend to benefit in the short term from high interest rates, as many bonds pay CDI + spread or IPCA + spread, increasing dividends. However, the risk of default also increases. 

Inflation also exerts a significant influence. Paper funds indexed to the IPCA or IGP-M pass on inflation more quickly, while real estate funds pass on inflation more slowly, through the annual readjustment of lease contracts indexed to the IPCA.

In general, high inflation, when accompanied by indexation, tends to partially protect the income of REITs (Real Estate Investment Trusts), but it can harm the real economy. Conversely, when inflation slows down, the yields of paper-based funds fall with a delay of several months, while brick-and-mortar funds revise rents with smaller adjustments on contract anniversaries.

Adjustments in the real estate market and their effects on vacancy rates and revenues.

The effects of natural adjustments that occur in the real estate market first appear in rent and vacancy rates, and this directly influences the income of those who invest in real estate or REITs (Real Estate Investment Trusts).

When interest rates rise and credit becomes more expensive, many families postpone buying furniture and opt for renting, which can strengthen rental prices, which, in turn, increases the risk of default.

During periods of economic slowdown, supply exceeds demand, vacancy rates increase, and the market enters an "adjustment" phase with falling or stagnant rents.

When demand starts to grow again, vacancy rates decrease, creating room for rental price increases, often above inflation.

In the case of real estate investment trusts (REITs) that focus on physical properties, increased vacancy rates can reduce revenue, since empty units do not generate rent, and to maintain occupancy, the manager accepts lower rents or more incentives.

Relationship between interest rate expectations and share valuation

The relationship is basically through the discount rate: when the market expects lower interest rates in the future, the rate used to discount the cash flows of REITs falls and the theoretical value of the shares rises. Conversely, when it expects higher interest rates, the opposite happens.

Thus, when interest rate cuts are expected at the Copom meeting, the discount rate decreases and the price of REITs increases, even before any effective change in current dividends.

If the market starts pricing in a higher Selic rate for a longer period, the discount rate rises, the present value of the same cash flow falls, and the quotas tend to be repriced downwards.

How might these adjustments affect income and dividend distribution?

Market adjustments affect the investment fund's cash flow and, consequently, the level and consistency of dividends distributed.

In general, "negative" adjustments (such as higher vacancy rates, rent discounts, high interest rates, etc.) tend to gradually reduce recurring income and lead to cuts or stagnation of dividends, while "positive" adjustments (such as higher occupancy, adjusted rents, and lower interest rates) strengthen cash flow and allow for maintaining or increasing the distribution per share in a more sustainable way.

What should investors consider when positioning themselves in REITs (Real Estate Investment Trusts) in 2026?

In 2026, positioning in REITs (Real Estate Investment Trusts) depends on understanding the interest rate cycle and its effects on the real estate market. The expectation of a gradual decrease in the Selic rate reduces the discount rate and tends to favor the appreciation of shares, while making fixed income less competitive, attracting flow to REITs.

In this context, it makes sense to carefully examine vacancy rates, property quality, and the ability to adjust rents in real estate investment trusts (REITs), as well as credit risk, indexers, and the concentration of debtors in paper-based REITs.