According to Nareit, active managers of real estate funds focused on REITs have been adjusting their allocations in the third quarter of 2024. The digital and healthcare sectors have seen the most significant shifts in investments, with data centers and telecommunications being the most overweight relative to their index weight at 130% and 123%, respectively.
Telecommunications has experienced a year-over-year increase for two consecutive quarters, up by 3.3 percentage points. Timberland and self-storage also saw increases both year-over-year and quarter-over-quarter, while retail, industrial, and residential all decreased.
In terms of property type allocation, residential remains the highest at 16.4%, followed closely by telecommunications at 15.5%. However, Nareit notes that this gap is narrowing over time.
Healthcare now ranks third with an investment allocation of 13.9%, after moving into this position last quarter. Industrial (11/1%) has dropped to sixth place behind retail (12/6%)and data centers (11/8%). Office space and lodging/resorts make up less than two percent each while diversified properties account for less than half a percent.
