Real estate investment funds (REITs) are starting the year with high expectations. After breaking through skepticism in the sector last year with one of the best performances among local assets, investors anticipate a repeat of these positive results in 2026.

Caio Nabuco, a real estate analyst at Empiricus, sees three factors behind the renewed vigor of the IFIX, the main index in the sector – the indicator rose 21% last year, even with a Selic rate of 15%.

The first is the fall in interest rates, sustained by a historical pattern: after the last three pauses in the upward cycle, the following 12 months brought average increases of 20%, and in the last six months they have risen by about 9%. The other two factors are the election, treated by the market as a binary event in a scenario of fiscal concern, and the tax reform.

“Real estate funds were excluded from the calculation base of the new dividend taxation law, making them an attractive vehicle for this audience. And we will also have the tax reform itself, which will also affect physical real estate, favoring allocation via funds,” says Nabuco, in an interview with Wealth Point, a NeoFeed program.

In a scenario of falling interest rates and recovery in the real estate sector, real estate investment trusts (REITs) have greater return potential than bond funds. Because they are more discounted and because their portfolios are in better condition, the drop in interest rates should help their performance.

“Discounts are very high, offering great potential for capital gains. Interesting segments include shopping centers, hedge funds (hybrid funds), and offices. Furthermore, occupancy is more attractive, with real rent increases, resulting in better returns for investors,” says Flávio Pires, real estate fund analyst at Santander.

His preferred real estate investment funds are TRX Real Estate FII, Urban Income (TRXF11), Vinci Logística FII (VILG11), and Hedge Brasil Shopping (HGBS11). Caio Nabuco, on the other hand, prefers BTG Pactual Logística FII (BTLG11), Pátria Malls FII (PMALL11), and VBI Prime Properties FII (PVBI11).

But paper-based funds will continue to pay well, with an average dividend yield of 1% per month.

Risks to monitor include a smaller-than-expected drop in the Selic rate and the volatility of the electoral scenario. In an appreciation cycle, the return of follow-on offerings is expected, and requires investor diligence to distinguish between capital raising that actually creates value and opportunistic issuances.