October 13, 2026
Rising interest rates are generally bad for property prices, and real estate stocks have felt it. A recent Barron’s article by Amey Stone (October 9, 2026) lays out why some investment professionals still see reasons to look at the sector now. Here is a summary of the key ideas, along with what to weigh before acting.
The pressure on real estate
According to Barron’s, real estate stocks are down about 15% from their early 2022 highs, before rates began climbing from near-zero pandemic levels. A recent jump in bond yields added to the strain. The article reports that the $66 billion Vanguard Real Estate ETF is down 7% over the past month, with a five-year average annual return of about 1%, weighed down by a 26% loss in 2022.
The cautious view
Derek Schug of Kestra Investment Management told Barron’s that current valuations look appealing but could get cheaper if rates keep rising. His firm had a modest overweight to real estate when investors expected rate cuts, and it has since moved to roughly the S&P 500 weighting of about 2%.
The contrarian argument
The case for buying anyway rests on two points from the article. First, rates are rising partly because the economy is strong, which supports demand for property. Second, real estate offers income and inflation protection. Liz Bell of Hamilton Lane described it as a hard asset that can complement stocks and bonds, where valuations are harder to judge because of the influence of AI.
Brian Cordes of Cohen & Steers pointed to healthy fundamentals: stronger demand for quality properties in several markets and fewer construction starts, which are unlikely to recover while financing costs stay high.
Where professionals see opportunity
The article suggests that selectivity matters more than broad exposure. Mike Acton of AEW said that if higher rates persist, investors will need to focus on earnings growth, which favors active management. The areas mentioned include:
- Senior housing, which Acton described as an easy-to-understand demographic story.
- Data centers, though Cohen & Steers has trimmed some holdings because of high prices.
- Beaten-down segments such as cell towers and single-family rental REITs (real estate investment trusts, companies that own income-producing property), which Cohen & Steers is more positive on.
- Hospitality, where Peachtree Group CEO Greg Friedman cites limited new supply and strong travel demand among young adults.
- Land, which Schug mentioned as a related inflation-sensitive option.
- Private real estate credit, where higher rates are stressing parts of the lending market. Friedman and Bell say funds can buy loans at a discount. The article notes these funds typically have high minimums and withdrawal restrictions and are sold through financial advisors.
What this means for investors
The article does not claim that higher rates are harmless. Its argument is that valuations are lower, fundamentals in several subsectors are solid, and results will likely depend on picking the right segments. Anyone considering these ideas should weigh their own time horizon and risk tolerance and speak with a financial advisor.
Source: Amey Stone, “The Case for Investing in Real Estate Now, Even With Rising Interest Rates,” Barron’s, October 9, 2026. [Insert link to original article]