How Did the Global REIT Industry Follow the US REIT Model?

US is the pioneer

As we discussed in the last part, REITs were introduced in the US in 1960. For the next 30 years, REITs were largely confined to the US and Australia. No other major countries adopted the REIT structure like Simon Property Group (SPG) and Ventas (VTR). However, things started to change when some countries introduced REIT-like structures in the mid-1990s. Brazil introduced REITs in 1993. It was followed by Canada and Spain in 1994 and Belgium in 1995. Asia still wasn’t in the picture.

How Did the Global REIT Industry Follow the US REIT Model?

Other countries adopted REITs recently

The major growth of REITs happened only after 2000 when some of the key Asian countries introduced REITs. Japan adopted REITs in 2000. It was followed by Singapore in 2002 and Hong Kong in 2003. Europe was a bit late in introducing REITs compared to Asia. While France was the first major European country to launch REITs in 2003, the United Kingdom and Germany introduced REITs in 2007.

REITs’ contribution to global real estate

With the introduction of REITs in most of the countries, the global listed real estate witnessed astonishing growth. The FTSE EPRA/NAREIT Global Real Estate Index is the most comprehensive index for the REIT and global listed property market. It included 471 listed real estate companies in 48 countries. The importance of REITs like Equity Residential (EQR) can be gauged from the fact that of the $1.2 trillion total equity market capitalization of the Developed Markets Index, REITs contributed 79%.

Investors looking for diversification in the REIT sector can get exposure to the global REIT ETFs like the iShares Global REIT ETF (REET), the SPDR DJ Wilshire Global Real Estate ETF (RWO), and the ALPS Cohen & Steers Global Realty Majors ETF (GRI).