With just three weeks left in 2025, it’s fair to say the real estate sector and the related ETFs haven’t done much this year to excite investors. As of Dec. 9, the largest ETF dedicated to the sector was barely positive on a year-to-date basis.
Disappointing to be sure, but that’s not an invitation for investors to outright ignore listed real estate investment trusts (REITs) in 2026. They may want to consider the opposite approach and evaluate opportunities with ETFs such as the ALPS Active REIT ETF (REIT ).
Importantly, the 2026 case for ETFs like the actively managed REIT isn’t rooted in speculation that real estate will bounce back next year, even though it lagged this year. Instead, 11
Valid Reasons REIT Could Be 2026 Winner
A variety of factors, some of which may be going overlooked by market participants, underpin the argument for real estate stocks rebounding in 2026.
“In challenging economic and financial market conditions, REITs have continued to deliver solid operational performance and maintained well-structured balance sheets with low leverage,” observes Nareit. “While this has been a consistent theme over the past several years, it has been underappreciated by investors.”
Investors considering ETFs such as REIT ought to examine the encouraging net operating income (NOI) and same-store net operating income (SS NOI) growth trends in the sector. On a related note, the ALPS ETF could be especially appealing because it’s actively managed, meaning it can tap into compelling NOI and SS NOI stories.
“As of the third quarter, REIT year-over-year NOI and SS NOI growth rates were 5.2% and 2.8%, respectively,” adds Nareit. “More than 60% of REITs posted positive year-over-year NOI growth rates; more than 50% had year-over-year SS NOI gains. Continued solid operational performance in a challenging market is a testament to REITs’ asset selection and management expertise.”
Another point in favor of REIT is the strength of balance sheets across the real estate sector. That’s broad commentary, but as an actively managed fund, REIT can more rapidly access superior balance sheet REITs than many index-based rivals.
“In difficult times, the strength of a company’s balance sheet often takes center stage. Across the two time periods, REITs have proven to be excellent stewards of their balance sheets. REITs’ emphasis on fixed rate debt and longer terms to maturity have limited their exposure to higher interest rates and highlighted their focus on long-term investment,” concludes Nareit.
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