Each real estate sector—whether residential, commercial, or industrial—comes with varying levels of risk and reward. With a bit of research, investing in one (or a combination of) of these sectors can yield excellent returns.
DiversyFund used data from the FTSE Nareit All Equity REITs Index, last updated on June 4, 2021, to curate a list of today's 10 best-performing real estate sectors. The sectors are ranked by their year-to-date total return in 2021, with ties broken by market capitalization as of May 28, 2021. The implied market capitalization in this dataset is, according to Nareit, “calculated as common shares outstanding plus operating partnership units, multiplied by share price.”
REITs, or real estate investment trusts, are attractive options for investors without a lot of available cash or those who don't want all their money tied up in a single property. One major benefit of REITs is the potential ongoing income, despite investors not seeing as much total appreciation. Some REITs are public non-listed or private, but the majority are traded on stock exchanges.
Equity REITs fund residential and commercial properties and make money through sales and rentals. Mortgage REITs, or mREITs, underwrite mortgages and mortgage securities, with returns coming from the interest on those purchases.
Keep reading to find out which real estate sectors are performing best, how they weathered the pandemic, and discover projections for each sector's future performance.