REITs (Real Estate Investment Trusts) were born in the US in 1960. As the US government saw it, these assets were meant to encourage small investors to participate in large real estate investments. They have been subsequently adopted by Holland, Australia and Belgium, and, in 2007, in Germany, Great Britain, and now in Italy, too, where they are called SIIQs.
In the US, the market for REITs grew from 1990 to 1997, it then stagnated, as money poured into dot-com stocks, but, after the bubble burst, it resumed its upward trend, as money moved back from clicks to bricks.
In more mature markets (US, Australia, Holland, Belgium), REITs now amount to 80-85% of the total real estate equity market. With the development of the market, REITs have more and more focused on specific asset classes (retail, office, hotel real estate). In the US, nine out of the top ten REITs invest more than 90% of the money they manage in a single asset class, and trends in Europe and Australia are similar.
Looking at the global market, in the first semester of 2007 the market for REITs saw about 500 listed operators, for a total capitalization of €420 billion. The US account for 56% of the global market in REITs, as compared to 23% of all listed real estate equities.
The introduction of REITs in the UK in January 2007 has been followed by a very fast development of this class of assets, which have reached 8% of the market. France follows with 7% of the global market. Australia counts for 12%, while Continental Europe now accounts for 11% of the global market for Real Estate Investment Trusts.
by Guido Vesin,
Business Administration, Control, Finance and Real Estate Division, SDA Bocconi School of Management