Key Takeaways
- • Matt Norris, head of real estate at Gravis, projects optimistic performance for the TM Gravis UK Listed Property (PAIF) Fund in 2026, driven by portfolio positioning aligned with four structural socio-economic mega trends and continued M&A activity in the UK REIT sector.
- • The fund's portfolio allocation targets four major demographic and economic shifts: ageing population (15.3% weight in care homes and GP surgeries), digitalisation (27.9% in logistics and e-commerce real estate), generation rent/build-to-rent (15.5% including Grainger exposure), and urbanisation (11.9% in West End offices via Derwent London and Great Portland Estates).
- • UK REITs delivered strong mid-year 2026 performance, outperforming broad equity markets by a significant margin and reversing 2025 underperformance, demonstrating capacity to generate returns in elevated and rising interest rate environments.
- • Valuation multiples between REITs and broader equities are beginning to converge as the technology rally loses momentum and REIT total returns accelerate, suggesting a potential rerating of the real estate sector relative to growth equities.
- • The fund maintains 24.9% allocation to REITs with multi-trend exposure, maximizing exposure to assets benefiting from multiple structural tailwinds simultaneously.
Summary
Matt Norris, head of real estate at Gravis and manager of the TM Gravis UK Listed Property (PAIF) Fund, expressed optimism regarding real estate asset performance in 2026, attributing this outlook to strategic portfolio positioning aligned with structural mega trends and sustained M&A activity within the UK REIT sector. The fund's investment thesis centers on capturing value from four primary socio-economic shifts expected to drive real estate demand over the medium to long term.
The fund's allocation strategy reflects granular exposure to these mega trends. The ageing population trend—driven by demographic shifts requiring care homes and GP surgery infrastructure—comprises 15.3% of portfolio weight. Digitalisation, encompassing logistics facilities and new commerce real estate, represents the largest allocation at 27.9%. The generation rent cohort, targeting build-to-rent sector assets including exposure to Grainger, accounts for 15.5% of holdings. Urbanisation, focused on West End office space and development platforms such as Derwent London and Great Portland Estates, comprises 11.9% of the portfolio. An additional 24.9% targets REITs with multi-trend exposure, enabling investors to capture compounding benefits from assets positioned across multiple structural drivers.
Performance data through mid-2026 validates this strategic positioning. UK REITs substantially outperformed the broader equity market during this period, reversing the underperformance observed in 2025. Notably, this outperformance occurred despite an elevated and rising interest rate environment, countering historical correlations between rate increases and real estate sector weakness. The combination of strong REIT total returns and a concurrent deceleration in technology sector momentum has begun narrowing the valuation multiple divergence between REITs and broader equities, suggesting potential sector rerating and ongoing M&A consolidation activity within the REIT space.
The fund's allocation strategy reflects granular exposure to these mega trends. The ageing population trend—driven by demographic shifts requiring care homes and GP surgery infrastructure—comprises 15.3% of portfolio weight. Digitalisation, encompassing logistics facilities and new commerce real estate, represents the largest allocation at 27.9%. The generation rent cohort, targeting build-to-rent sector assets including exposure to Grainger, accounts for 15.5% of holdings. Urbanisation, focused on West End office space and development platforms such as Derwent London and Great Portland Estates, comprises 11.9% of the portfolio. An additional 24.9% targets REITs with multi-trend exposure, enabling investors to capture compounding benefits from assets positioned across multiple structural drivers.
Performance data through mid-2026 validates this strategic positioning. UK REITs substantially outperformed the broader equity market during this period, reversing the underperformance observed in 2025. Notably, this outperformance occurred despite an elevated and rising interest rate environment, countering historical correlations between rate increases and real estate sector weakness. The combination of strong REIT total returns and a concurrent deceleration in technology sector momentum has begun narrowing the valuation multiple divergence between REITs and broader equities, suggesting potential sector rerating and ongoing M&A consolidation activity within the REIT space.
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