Real estate investment trusts for non-US investors

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Ambox globe content.svg This article contains details specific to non-US investors. It does not apply to United States (US) investors, or to US citizens and US permanent residents (green card holders) living outside the US.

A Real Estate Investment Trust (REIT) is a single company REIT (or a group REIT) that owns and manages property on behalf of shareholders.

Real estate investment trusts were first established in 1960 under new legislation in the US. The new law allowed small investors to access investment in real estate without the need for large capital outlays or the responsibility and burden of property maintenance and upkeep required with direct real estate investments.

REITs have now been widely established across the developed world and some emerging market jurisdictions as an alternative investment asset class.


The DIY investor has a number of avenues to make investments into property. This can be purchase of land, buildings, or both, either directly or through an indirect investment in a property company or fund (including REITs).

In addition an investor can gain access to property investment via debt instruments. Mortgage backed securities can be accessed via ETFs, see: iShares US mortgage backed securities UCITS ETF fund.

Direct investment in property requires specialist skills and has specific risks. Direct property investment or investment via debt instruments are not considered here.

The use of REITs as a means to gain access to property investment by purchasing shares in an REIT fund allows the DIY investor access without the need for specialist knowledge and should reduce the risks of direct property investment.

Over 40 countries world wide now have similar REIT legislation in place.

Over the last 20 years in Europe 14 countries have put in place the legislation to establish real estate investment trusts.

Key features of REITs include an exemption of corporation tax on rental profits and gains from their property rental business. As a result, REITs must distribute 90% of their net property rental income to investors.

The non-US DIY investor of REITs needs to take careful cognisance of the local legislation and regulations particularly applicable to the investment in REITs in the investor's location. The DIY investor should seek the advice of a qualified financial adviser prior to making an investment in REITs.

Purpose of REITs in a portfolio

The inclusion of REITs in a Boglehead portfolio can be regarded as part of asset diversification, and can assist with tax planning. For more, see Real estate investment trust.

Typically an index fund of equities will already include the appropriate proportion of REITs for the market that the index is following.

Refer to material in the wiki on asset allocation in the first instance. Some DIY investors wish to build more complex portfolios to include wider diversification. See also: Complex non-US portfolios

The method for the inclusion of REITs considered in this paper is through investment in REIT ETFs and furthermore the REIT ETFs considered here are UCITS versions. Alternative versions may be considered in jurisdictions such Australia, Canada and Japan for example.


REIT legislation has been enacted in many developed and emerging market locations. The use of US based REITs is not discussed in any detail here. However reference to the main wiki section on REITs is principally applicable to US based REITs: see Real estate investment trust. The diversification into international REITs is dealt with in the main wiki, in International REITs; however the information contained in that section is dated.

The broad acceptance of REITs as an investment asset in the US, allied with the spread of REITs to other jurisdictions utilising the same fundamental underlying principles, allows the DIY investor to avail of further diversification using REITs based across many jurisdictions, in addition to US REITs.

The lists of REIT jurisdictions given below are not exhaustive and the information is taken from the EPRA Global Survey 2019.[1]



The investment fund for real estate endeavours is called a ’Fundo de Investimento Imobiliário’ (FII) and was introduced in Brasil in 1993.

(x22 REITs)


Canadian REITs were established in 1993. They are required to be configured as trusts and are not taxed if they distribute their net taxable income to shareholders.

(x46 REITs)


Congress established real estate investment trusts in 1960 as an amendment to the Cigar Excise Tax Extension of 1960. The provision allows individual investors to buy shares in commercial real estate portfolios that receive income from a variety of properties.

(x192 REITs)



Fixed trusts have traditionally been the preferred vehicle for holding real estate investments in Australia. They are typically set up as a listed (public) or unlisted fixed unit trust (i.e. investors subscribe for units). Listed property trust legislation was enacted in 1985.

(x44 REITs)

Hong Kong

The Code on Real Estate Investment Trusts (Code on REITs) was first introduced in July 2003 and revised in June 2005.

(x9 REITs)


In Japan, REITs were introduced with the amendment to the Act on Investment Trusts and Investment Corporations (Investment Trust Act) in November 2000.

(x66 REITs)


The REIT regime in Singapore is principally regulated by the Securities and Futures Act (Cap. 289), the Code on Collective Investment Schemes (the ‘Code’) issued by the Monetary Authority of Singapore (MAS), the Property Fund Guidelines appended to the Code and the Income Tax Act. The first set of regulatory guidelines for property funds was issued by the Monetary Authority of Singapore in May 1999.

(x37 REITs)



Article 11 of the Finance Act for 2003 (Law n° 2002-1575 of December 30, 2002) introduced a specific corporate income tax exemption regime applicable to listed real estate investment companies (sociétés d’investissements immobiliers cotées, SIICs) available upon election and subject to conditions.

(x30 REITs)


Germany implemented the German Real Estate Investment Trust (G-REIT) in 2007

(x5 REITs)


The Italian REIT regime was introduced in Italy by the Law No. 296/2006, which provides for a special civil law and tax regime applicable to Italian listed real estate investment companies.

(x3 REITs)


The Irish REIT tax legislation was introduced in the Finance Act 2013.

(x4 REITs)


The Netherlands introduced the Fiscal Investment Institution regime (fiscale beleggingsinstelling: FBI) in 1969. An FBI is in principle subject to Dutch Corporate Income Tax, albeit at a rate of zero per cent (0%) (a de facto full exemption).

(x5 REITs)


Act 11/2009 governing the ‘Sociedades Anónimas Cotizadas de Inversión en el Mercado Inmobiliario’ (known as ‘SOCIMI’) introduced the REIT vehicle to the Spanish real estate market.

(x71 REITs)

United Kingdom

The legislation setting out the rules for REITs in the United Kingdom came into effect in January 2007.

(x55 REITs)


The caveats noted in the main wiki section on US REITs should also apply to the non-US REITs, and may in fact introduce additional comparable risks. These risks include the small number of publicly quoted REITs that may be available in any market, and the likelihood that the REIT exposure to that market may only represent a small proportion of that property market or sector.

In addition there are differences in the legal framework for REITs both between the US and other markets and also for example between different jurisdictions in Europe.

The differences in currencies will lead to the requirement for global or regional REIT funds having to consider hedging strategies.

Transaction costs and taxes vary and can be significant in certain jurisdictions, and investing across borders may impact the tax advantages of REIT investments.

Costs of investing in REITs and REIT funds and ETFs can be more than for other asset classes. Total expenses ratios have been reducing, however costs should be carefully considered.

REIT indices

  • MSCI US REIT Index
    • The MSCI US REIT Index is a free float-adjusted market capitalization weighted index that is comprised of equity Real Estate Investment Trusts (REITs).
  • MSCI China Real Estate 10/50 Index
  • FTSE EPRA Nareit Global Real Estate Index Series

The FTSE EPRA Nareit Global Real Estate Index Series is designed to represent general trends in eligible real estate equities worldwide.

FTSE Russell’s real estate indexes benchmark exposure to real estate at a broad industry-wide level or on a more narrowly-focused sector-by-sector basis.

  • FTSE EPRA Nareit Americas
  • FTSE EPRA Nareit Asia Pacific
  • FTSE EPRA Nareit Asia Pacific ex Japan index
  • FTSE EPRA Nareit Developed
  • FTSE EPRA Nareit Developed Asia
  • FTSE EPRA Nareit Developed Dividend+
  • FTSE EPRA Nareit Developed Europe
  • FTSE EPRA Nareit Developed ex US
  • FTSE EPRA Nareit Developed Super Liquid
  • FTSE EPRA Nareit Emerging
  • FTSE EPRA Nareit Eurozone
  • FTSE EPRA Nareit Europe
  • FTSE EPRA Nareit Global
  • FTSE EPRA Nareit Global ex US
  • FTSE EPRA Nareit UK
  • FTSE EPRA Nareit US Dividend+
  • FTSE EPRA Nareit US Super Liquid

Other REIT indices:

  • AlphaShares China Real Estate Index
  • AlphaShares Emerging Markets Real Estate Index
  • Cohen & Steers Global Realty Majors Index
  • Dow Jones Global ex-U.S. Real Estate Securities Index
  • Dow Jones Global ex-U.S. Select Real Estate Securities Total Return Net Index (USD) Hedged
  • Dow Jones Global Select Real Estate Securities Index
  • iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index
  • Northern Trust Global Quality Real Estate Index
  • S&P Asia Pacific Property Index
  • S&P Developed BMI Property Index
  • S&P Developed ex US Property Index
  • S&P Developed Property Index
  • S&P Europe Property Index
  • S&P Global Developed Property Index
  • S&P Global ex-U.S. Property Index
  • S&P Global ex-U.S. REIT Index
  • S&P Global REIT Index
  • S&P/Citigroup World Ex-U.S. Index
  • WisdomTree Global ex-US Hedged Real Estate Index
  • WisdomTree Global ex-US Real Estate Index
  • WisdomTree International Real Estate Index

Access to REITs

The DIY investor will usually seek to invest in any asset class using a regulated passively managed low cost index fund. The case for REITs should be no different.

Searching for REITs on a total of 21 REIT funds are available to the DIY retail investor as of November 2019. All of these funds are ETFs and UCITS compliant: see justetf REITs selection.

Searching for the availability of REIT ETFs in Europe using iShares, they offer 12 products with the UCITS designation as of November 2019 when searching their UK iShares website, see iShares UCITS REITS.[note 1]

The individual DIY retail investor may also choose to purchase REIT shares rather than buying an index. This is regarded as a riskier approach leading to excess potential volatility and losses associated with the price movements of individual shares.


The costs of holding US REIT funds varies considerably, ranging from as low as 0.07% to 0.43% according to the US REIT section of the wiki (November 2019).

The costs of holding UCITS REIT funds varies considerably, ranging from as low as 0.14% to 0.64% according to a search of REITs on (November 2019).

These cost rates exclude any trading costs and spreads if applicable.


Asset type

REITs are regarded as equities notwithstanding that they have some bond like characteristics due to their dividend policies. They carry a measure of risk significantly greater than government bonds.


  • REITs as any element of property are subject to market fluctuations. Real estate drawdowns can be very significant.
  • The returns from REIT ETFs are subject to personal taxes.
  • REITs and therefore REIT ETFs may have high costs and fees that cause drag on the returns.
  • REIT performance can be affected by management issues causing return difficulties.

Return characteristics

REITs historically have promised to provide investors of all types regular income streams, diversification and long-term capital appreciation. Their comparative correlation with other assets can make them a good portfolio diversifier that can help reduce overall portfolio risk and increase returns.

Dividends from REITs are substantial because they are required by law to distribute at least 90% of their taxable income to their shareholders annually. The dividends are driven by the stable contractual rents paid by the tenants of their properties, often on long leasehold terms.


As REITs are publicly listed vehicles they retain a greater degree of liquidity than direct property investments. REIT ETFs are traded as other ETFs on the stock market.


REITs invest in different property types and sectors thus providing diversity within the property asset class.

The regulatory regime that REITs typically exist in means that governance plays an important part of the running of the firms and leads to greater transparency than private property companies.


See also


External links