Growing the Global REIT Market

REIT magazine: September/October 2019

As the REIT approach to real estate investment continues to take hold globally, investors from all walks of life have greater access to income-producing real estate and the benefits it provides. Nareit is dedicated to both advocating for the REIT approach to real estate investment around the world and to encouraging investment in U.S. REITs by domestic and foreign investors.

While the U.S. remains the largest listed real estate market, the market is increasingly becoming more global. Today, 39 countries and regions around the world, including all of the G7 nations, have a REIT regime in place. Most recently, Portugal passed its REIT legislation in January, adding it to the growing list of countries that have adopted the U.S. approach. Globally, 15 of the 30 largest listed real estate companies in the world are REITs, which includes 13 U.S. REITs.  REITs also comprise 75.2% of the market capitalization in the FTSE EPRA/Nareit global universe.

The growth of REITs and listed real estate globally is good for real estate markets and investors. Recent research shows that an allocation to global listed real estate improved the returns of a diversified investment portfolio. For many, global real estate focused mutual funds and exchange-traded funds often offer an easy and efficient way for investors to add global allocations to portfolios. 

Sandeep Mathrani, 2019 Nareit Chair
CEO, Brookfield Properties Retail
Vice Chairman, Brookfield Properties

Nareit’s outreach message has three key components: real estate is a fundamental asset class; portfolio allocations to real estate should be in the range of 5% to 15%; and REITs are the low cost/liquid means of accessing the real estate asset class. As a key element in making the case for adding listed real estate to investorportfolios, Nareit uses research that demonstrates that on a net basis, REIT returns have exceeded those of private real estate by nearly 3% per year. 

As the REIT model has spread across the world, competition for capital is also global, and Nareit represents its members in this competitive environment. Throughout 2019, Nareit has brought its outreach message to investors in Europe, Asia, and the Middle East, including through joint meetings with partners like the European Public Real Estate Association and the Asia Pacific Real Estate Association. To date, Nareit’s Investor Outreach team has been encouraged by the receptivity to its message.