Global multi-asset index and analytics provider FTSE Russell and real estate industry experts EPRA and NAREIT recently shared new statistics highlighting the growing scope and strategic importance of global real estate stocks to investors. This comes as FTSE Russell announces its decision to add real estate as the newest standalone Industry in the ICB® classification structure and the FTSE Global All Cap Index, effective January 1, 2019.
According to FTSE Russell analysis:
- The future ICB Real Estate Industry within the FTSE Global All Cap Index includes approximately 600 securities including REITs, 4% of the index and nearly $2 trillion (USD) of investable market cap as of June 30, 2017.
- The 3-year correlation of indexes measuring global real estate to that of banks, insurance and financial services companies have roughly halved since the 2007-2011 global financial crisis.
- Notably, investor interest in indexes measuring global real estate markets has grown significantly, with emerging markets real estate companies and REITs returning 45% in USD terms in 2017 as of September 8 as measured by the FTSE EPRA/NAREIT Emerging Index.
Source: FTSE Russell. Past performance is no guarantee of future results. Please see the end for important legal disclosures.
Dominique Moerenhout, CEO, European Real Estate Association (EPRA), said:
“The listed real estate industry continues to grow globally as it provides investors stable long-term dividend income streams. FTSE Russell’s elevation of Real Estate as its 11th ICB Industry is timely, as the listed real estate industry is increasingly viewed as an investment asset class in its own right.”
Michael Grupe, executive vice president, research & investor outreach, National Association of Real Estate Investment Trusts (NAREIT), said:
“As evidenced by relatively low correlations of returns with other assets in the global opportunity set, listed real estate is widely viewed by investors as a diversifying asset class, separate from the financial sector that includes banks and insurance companies. Investors distinguish listed real estate from other equities to develop more refined portfolio analysis and more efficient portfolio allocations.”
Catherine Yoshimoto, senior product manager, FTSE Russell, said:
“The global real estate sector has clearly grown in scope and investor interest in recent years, while becoming less correlated with the rest of the financial services industry. These trends helped drive our decision to create a separate headline industry for this asset class for investors.”
For more information on FTSE Russell’s planned enhancements to its Industry Classification Benchmark (ICB) following a recent market consultation or on the FTSE EPRA/NAREIT Global Real Estate Index Series, go to the FTSE Russell website.
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