How to invest or trade in REIT stocks and ETFs

What are REIT stocks and ETFs?

Real Estate Investment Trusts stocks — commonly referred to by their initialism REITs — are shares of companies that own, manage, or finance income-producing real estate across various sectors, including residential, commercial, industrial, healthcare and hospitality. In the UK, they are legally required to distribute at least 90% of their taxable income as dividends to shareholders — which makes them attractive to income investors.

Meanwhile, REIT ETFs are funds that hold a diversified basket of REIT stocks, providing investors with exposure to the real estate market without having to pick individual REITs. They allow investors to gain broad sector exposure with a single purchase, while reducing their risk through diversification.

How do REIT stocks and ETFs work?

REITs operate primarily in two ways: Equity REITs own physical property like office buildings, shopping malls and homes and collect rent, while Mortgage REITs provide financing including mortgage loans and mortgage-backed securities for real estate deals and earn income through interest payments. Both are directly tied to the value of the properties they are attached to.

Investors can buy and sell REIT stocks like any other listed investment. While the larger-than-average dividend distributions are a key attractant, it’s also worth noting that feature also means they are usually limited in their growth potential and also can struggle in downturns, often because of a combination of falling property values and lower cash buffer.

REIT ETFs function similarly — and are often managed passively — meaning they track a real estate index rather than being actively managed, keeping costs lower. Investors can earn dividends from REIT ETFs and benefit from capital appreciation as the wider real estate market segment the ETF focuses on grows.

There are many kinds of REIT stocks, simply due to the diversity of the real estate sector. All come with their own advantages and drawbacks:

• Residential REITs — own and manage domestic dwellings, including houses and flats, offering exposure to population growth, housing demand, and rising rents
• Retail REITs — focus on both in-town and out-of-town shops. Their performance is linked to consumer confidence and tenant stability
• Office REITs — these own office buildings and lease space to businesses. They are highly sensitive to the wider financial environment and recent trends including remote work
• Industrial REITs — specialise in warehouses, distribution centres and logistics facilities. These have risen sharply due to the growth of e-commerce
• Healthcare REITs — own medical offices, hospitals, senior housing and nursing facilities. They benefit from aging demographics and rising healthcare demand
• Hospitality REITs — invest in hotels and resorts. Their performance depends on travel and tourism trends
• Data Centre REITs —own and manage facilities that house servers and cloud computing infrastructure. Arguably reliant on the emerging artificial intelligence trend
• Self-Storage REITs — operate storage facilities, benefiting from urbanisation, space constraints and consumerism
• Infrastructure REITs — own essential infrastructure like cell towers, fibre networks and energy pipelines. Typically lower risk but with lower yields

How to invest in REIT stocks with us

1. Learn more about REIT stocks
2. Download the IG Invest app or open a share dealing account online
3. Search for REIT stocks on our app or web platform
4. Choose how many shares you’d like to buy
5. Place your deal and monitor your investment

Investors look to grow their capital through share price returns and dividends - if paid.

But the value of investments can fall as well as rise, past performance is no indicator of future returns, and you could get back less than your original investment.

We also offer many REIT ETFs, including the Vanguard REIT ETF in the US, which tracks the return of the MSCI US Investable Market Real Estate 25/50 Index. Sporting a low expense ratio of 0.13%, top holdings include Prologis and American Tower Corporation.

For those seeking UK exposure, the iShares UK Property UCITS ETF is a common choice. It seeks to track the performance of an index composed of UK listed real estate companies and Real Estate Investment Trusts — and comes with a total expense ratio of 0.4%. Top holdings include SEGRO REIT and Land Securities Group REIT.

REIT stocks vs other investing strategies

When it comes to investing in property, the natural alternative to REIT stocks and ETFs is simply buying physical properties — much like you might buy physical gold instead of a gold ETF. However, REIT stocks are significantly more liquid; you can buy and sell them in the market in seconds compared to the months it takes for physical sales to go through.

They’re also undeniably less hassle than owning your own property portfolio and allow you to invest in multiple property sectors rather than single units. Further, while buying physical property can be tax-advantaged with higher potential returns, it also requires significant upfront capital and maintenance.

When compared to other stocks or bonds, REITs rend to offer higher dividend yields due to the distributions regulation — but at the expense of growth. This can make REIT stocks more attractive to older investors looking for lower risk and reliable income, but less popular for younger investors with the timeline needed to ride out growth stock volatility.

Best REIT stocks to watch

These are the five largest REIT stocks in the UK by market capitalisation as of March 2025.

1. SEGRO (LON: SGRO)
2. Land Securities Group (LON: LAND)
3. Unite Group (LON: UTG)
4. LondonMetric Property (LON: LMP)
5. British Land (LON: BLND)

SEGRO

SEGRO is the UK’s largest REIT and also one of the largest across Europe, specialising in industrial and logistics properties, with a particular focus on warehouses and distribution centres.

The company sports 10.4 million square metres and £20.7 billion in assets under management. It’s benefitted hugely from the growing demand for logistics space driven by e-commerce growth, though is also having to balance this positive with sensitivity to a potential economic downturn.

Land Securities Group

Land Securities Group is one of the UK’s largest commercial property development and investment companies, focusing on office spaces, retail centres, and mixed-use properties.

It’s well known as the owner of Nova in Victoria in London, a famous office and retail development. The REIT is popular for its diversified operations though is contending with reduced post-pandemic demand for office and retail space.

Unite Group

Unite Group is a student accommodation provider in the UK, operating purpose-built housing near major universities. Among other assets, it owns Stratford One, a large student housing development in London.

It enjoys stable demand as new students enrol every September with a high occupancy rate — but is arguably susceptible to government policy changes and falling international student numbers.

LondonMetric Property

Londonmetric Property REIT focuses on logistics and distribution assets, including urban warehouses for e-commerce and food retailers. It owns Bedford Link, a key logistics hub, and continues to benefit from the strong growth potential from online retail expansion. However, it’s also dealing with the long-term impact of rising interest rates hitting its valuations. It holds 26 million square feet under management valued at £6 billion, with more than 40% of assets in logistics.

British Land

British Land is a major UK property company with a portfolio including offices, retail parks, and urban regeneration projects. It owns Broadgate, a large mixed-use development in London and in general centres its portfolio on high-quality assets in central locations. Arguably, its largest problem is changing post-pandemic trends in office spaces. It has £13.6 million in assets under management and 20 million square feet of floor space.

Pros and cons of REIT stock investing

As with all investing strategies, there are advantages and drawbacks to REIT stocks:

Pros of REIT Stocks:

• Yields — one of the biggest benefits of REIT stocks is their high dividend yields. Because REITs are required to distribute most of their taxable income to shareholders, they often pay dividends well above the market average. This makes them especially attractive for income-focused investors
• Diversification — REITs provide diversification in an investment portfolio by offering exposure to the real estate sector, which tends to behave differently than stocks in other industries
• Liquidity — unlike direct real estate investments, which can take a long time to buy and sell, REITs and REIT ETFs can be bought or sold on stock exchanges with ease. This makes them a flexible, high liquidity way to invest in real estate without the commitment of property ownership.
• Hedging — real estate is often seen as an inflation hedge because property values and rents tend to rise over time, helping investors maintain their purchasing power

Cons of REIT Stocks:

• Interest rates —when interest rates rise, REIT prices often decline because higher borrowing costs can reduce profitability, and investors may shift to safer, higher-yielding assets like bonds
• Sector — some types of REITs, such as office or retail REITs, may struggle during downturns or industry shifts. For example, office REITs have faced challenges due to the rise of remote work, while retail REITs have been impacted by the growth of e-commerce. In contrast, industrial and data centre REITs have grown rapidly due to the expansion of logistics and cloud computing
• Growth — because REITs distribute most of their income as dividends, they have very limited ability to reinvest in growth, making them more dependent on expensive external financing, and perhaps less resilient during downturns

REIT Stocks and ETFs Summed Up

• REIT stocks and ETFs offer investors a convenient way to invest in real estate while enjoying passive income from dividends
• They provide diversification, liquidity, and inflation protection, making them an attractive option for income-focused investors
• However, REITs also come with risks such as interest rate fluctuations, economic downturns, and sector-specific challenges.
• For those seeking stable income and real estate exposure without the hassle of direct property ownership, REITs and REIT ETFs can be a valuable addition to your investment portfolio, as long as you manage the risks