Yes, you can invest in foreign REITs. Many international REITs are accessible through global stock exchanges or U.S.-listed international REIT ETFs. This allows you to diversify your portfolio with real estate assets from different countries and regions.
International REITs are real estate investment trusts that own or manage income-generating properties outside of the investor’s home country. These global REITs provide exposure to diverse real estate markets, such as commercial buildings in Europe, retail centers in Asia, or industrial facilities in Australia.
By investing in international REITs, investors can diversify their portfolios geographically, hedge against domestic market risks, and potentially benefit from growth in emerging or developed global economies.
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What are International REITs?
REITs are companies that own, operate, or finance income-producing real estate in several sectors, such as residential, commercial, retail, or industrial properties. International REITs, also known as global REITs or international property funds, are real estate investment trusts that invest in real estate properties and assets outside the investor's home country. They offer increased diversification by exposing investors to real estate markets and properties worldwide.
Investing in international REITs offers passive investment opportunities in global markets. In this way, REITs offer the benefits of real estate investment without the need for active management.
Top 6 International REITs to Invest in
Consider the following six international REITs for global diversification and long-term returns.
1. Public Storage (NYSE: PSA)
Public Storage is one of the largest self-storage REITs, with a market cap of $50.72 billion. It owns and operates 3,333 self-storage facilities spanning 241 million net rentable square feet and spread across 40 states in the United States.
Public Storage's primary international exposure comes from Shurgard Self Storage, which owns 315 properties in seven European countries. Shurgard has 17 million net rentable square feet of storage space as of September 2024.
While Public Storage also has domestic holdings, it has strong internal diversification if the U.S. market weakens. Stock prices have grown 50.35% over the past five years, and it offers a 4.15% annual dividend yield.
2. Digital Realty Trust Inc. (NYSE: DLR)
Digital Realty Trust is one of the largest REITs in the world. DLR owns more than 300 facilities in 50+ metro areas spread across over 25 countries on six continents. The revenue of the REIT totaled $1.4 billion as of September 2024.
With a market cap of $56.74 billion and annual dividends of 2.9%, Digital Realty Trust offers strong international diversification for global investors. Its stock price has jumped 17.2% over the past five years.
3. Realty Income (NYSE: O)
Realty Income owns more than 15,000 properties across the United States, the United Kingdom, and six European countries. It operates triple net leases, which means the tenants cover maintenance, tax, and insurance costs. Realty Income has increased its dividend yields for more than 25 years and pays a 5.65% annual dividend yield.
With a market cap of $51.62 billion and a diversification across global markets, Realty Income can be a stable long-term investment option.
4. iShares Global REIT ETF (NYSEARCA: REET)
iShares Global REIT ETF is an exchange-traded fund (ETF), meaning it is a pooled investment security that holds shares in other REITs or real estate stocks. With net assets of $3.91 billion, key holdings include Public Storage and Realty Income; Equinix, which specializes in global colocation data centers; and Prologis, which invests in logistics facilities worldwide.
iShares Global REIT ETF has a dividend yield of 3.48%, making it a strong growth-potential investment option.
5. Xtrackers International Real Estate ETF (NYSEARCA: HAUZ)
Another ETF option on the list, Xtrackers International Real Estate ETF invests in developed and emerging markets. An ETF REIT can offer better diversification than a single REIT. In terms of regional exposure, the ETF holds 62.74% of assets in Asia, 26.16% in Europe, and 8.16% in North America, with small positions in Latin America and Africa. The largest position is in Japan (20.54%).
HAUZ has a dividend yield of 3.99% and paid net assets of $824.7 million, offering reasonable dividends and strong international market diversification.
6. Vanguard Global ex-US Real Estate ETF (NASDAQ: VNQI)
Vanguard Global is a global real estate ETF that holds real estate stocks in 30 countries with $3.7 billion in net assets. The latest dividend yield was 3.99% or $2.04 per share in annual dividends. An erratic dividend history can leave investors guessing, which, along with weak capital appreciation, makes it a risky choice. But it offers long-term strong international diversification making it a reasonable global REIT ETF choice.
Where to Invest in International REITs
You can purchase REITs with your current broker or from the options here.
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Benefits of Investing in International REITs
If you're considering international REITs, here are the top reasons why they could be a strong choice.
- Diversification: International REITs allow investors to diversify their real estate holdings beyond their domestic market. Investing in properties across different countries and regions can reduce risk and gain exposure to various real estate sectors and economic conditions.
- Global Real Estate Exposure: International REITs provide access to a wide range of real estate assets globally, including residential, commercial, industrial, hospitality, and specialty properties. This benefit allows investors to participate in the performance of international real estate markets and potentially benefit from different market cycles and trends.
- Geographic and Currency Risk: Investing in international REITs involves exposure to different geographic regions and currencies. Factors such as political stability, economic conditions, regulatory frameworks, and foreign exchange rates can impact the performance and returns of these REITs. Investors should consider these risks and conduct thorough research before investing.
- Access to Expertise: Investment professionals with specialized knowledge and expertise in global real estate markets often manage international REITs. These professionals have the resources and networks to identify attractive investment opportunities and navigate the complexities of investing in foreign markets.
- Potential for Improved Returns: Different countries and regions may experience varied real estate cycles and economic conditions, allowing investors to benefit from diversification across markets that may perform differently at different times.
Risks of Investing in International REITs
While international REITs offer unique opportunities, they come with inherent risks that investors should consider:
- Fluctuations in Exchange Rates: Changes in currency values can significantly impact your returns. If the local currency of the REIT depreciates against your home currency, it could erode your gains, even if the REIT performs well in its local market.
- Government Policies: Regulatory environments vary widely between countries. Changes in tax laws, property ownership regulations, or foreign investment rules can adversely affect international REITs.
- Local Economic Health: Economic downturns or sector-specific weaknesses in the REIT’s country can impact property values, rental income, and demand.
- Liquidity Challenges: International REITs may be traded on foreign stock exchanges, where liquidity might be lower than in your home market. This can make it harder to buy or sell shares quickly at a favorable price.
Diversify your Portfolio with International REITs
International REITs offer investors diversification opportunities across global markets, from established real estate holdings in Europe or Japan to more speculative growth opportunities in Africa or Latin America. Investors can also consider the best REIT stocks right now, hotel REITs, commercial real estate REITs, or alternative investments.
Frequently Asked Questions
Can I invest in foreign REITs?
What is the 2 year rule for REITs?
The “2-year-rule” for REITs refers to a requirement under U.S. tax law: a corporation must wait at least two years after acquiring a property before selling it to avoid being classified as a dealer and losing REIT tax advantages. This helps ensure REITs focus on long-term income-producing investments rather than short-term property flipping.
What is the oldest REIT in the world?
The oldest REIT in the world is Continental Mortgage Investors, established in the United States in 1961 after Congress created the REIT structure. However, among REITs still active today, Washington Real Estate Investment Trust (now known as Elme Communities), founded in 1960, is considered one of the oldest continuously operating REITs.
About Alison Plaut
Alison Kimberly is a freelance content writer with a Sustainable MBA, uniquely qualified to help individuals and businesses achieve the triple bottom line of environmental, social, and financial profitability. She has been writing for various non-profit organizations for 15+ years. When not writing, you will find her promoting education and meditation in the developing world, or hiking and enjoying nature.
