To The Moon

With the 60 years of development of the global REITs market to date, more than 40 countries and regions around the world have adopted the US REITs approach to real estate investment, providing all investors with a global income-generating real estate portfolio.

While the U.S. remains the largest listed real estate market, the listed real estate market is increasingly becoming global. The growth is being driven by the appeal of the U.S. REIT approach to real estate investment. Today more than forty countries and regions have REITs, including all G7 countries.

Source: www.reit.com

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1. How Many REITs Are There in the World?

A total of 865 listed REITs with a combined equity market capitalization of approximately $2.5 trillion (as of December 2021) are in operation around the world. As the following charts show, REITs have grown dramatically in both number and equity market capitalization over the past 30 years going from 120 listed REITs in two countries to 865 listed REITs in more than 40 countries and regions.

Source: www.reit.com

Among them, Asia has a high absorption rate of REITs, growing from 31 REITs in 6 countries and regions in 2005 to 216 REITs in 11 countries and regions in 2021.

Singapore established the operation system of REITs as early as 1999, which is one of the earliest and most mature markets in Asian countries. India and China will join the market in 2014 and 2021 respectively. Since 2015, the Middle East has also seen significant growth with the addition of REITs in Saudi Arabia and Oman.

Note: Asia REITs with higher-interest rates, and Asian REITs payouts are more attractive.

2. How about REITs‘ Return？

Comparison of REITS and stock index and bond returns From the current issuance of REITs, companies and investors have achieved a win-win situation. The former has revitalized assets and the latter has obtained excess returns.

According to Wanhe Securities’ statistics on U.S. infrastructure REITs in March 2021, the U.S. infrastructure REITs index has grown at a compound annual growth rate of 12.11% since 2010, slightly higher than the S&P 500’s 11.67% over the same period.

According to research by investment consultancy Wilshire Associates, real estate allocation in listed markets around the world can help improve returns on a diversified portfolio. REITs play a key role in enhancing investment returns and reducing risk in target date funds (TDFs), popular investment products.

Source: www.reit.com

The Best REITs Can Still Grow Despite Higher Interest Rates

It’s important to note that REIT share prices aren’t just affected by interest rates but can and do trade on other factors, including a REIT’s fundamentals, long-term growth prospects, and dividend growth history.

The chart below, courtesy of REIT.com, plots the 12-month return of REITson the y-axis, and the change in the 10-year Treasury yield on the x-axis from 1992 through 2017. The blue dots represent periods when REITs earned a positive total return during each of those periods. The red dots signal that REITs lost money.

While an investment in REITs made money in 87% of rising rate periods observed, it is clear that REITs have been positively and negatively correlated with interest rates during different periods of time, indicating that there are other factors influencing their returns.

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