Are REITs rather moving with the share or the property market?

Hi everyone, I was wondering whether or not it is possible to say that REITs are rather moving with the share market or with the property market. I understand that different REITs have exposure to different types of properties and hence might behave differently. My understanding is also that most REITs concentrate on commercial property and that returns do not necessarily align with residential property. But being the more liquid-able asset compared to owning property outright, does that change anything about the dynamics of this asset class? I’m aware that roughly 6% of the ASX200 are coming from the real estate sector and that similar figures probably apply to other indexes. Ultimately it leads to the question whether or not additional exposure to REITs can be beneficial when not owning property. I acknowledge that this depends on personal circumstances, so maybe see it rather as a general discussion what REITs do to a portfolio in terms of market exposure, risk, expected returns and volatility. Cheers Dave

David S

Asked on 17 November 2023

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