Citi is also overweight residential REITs as growth and valuations remain attractive. While new supply is coming online, demand for rental apartments is still high – recent data showed that apartment occupancy rates are at record highs. [Residential REITs Shine as Apartment Occupancy at All-Time High]
Lastly, Citi sees increased demand among strips or mall-related retail REITs.
The various broad REITs ETFs allow investors to capture diversified exposure to these these sub-sectors. For example, VNQ includes 13.2% healthcare REITs, 7.4% hotel & resort REITs, 16.3% office REITs, 16.8% residential REITs and 25.1% retail REITs. RWR holds 18.4% apartments, 16.2%, regional malls, 12.4% healthcare, 10.8% office, 7.4% strip centers, 7.1% hotels and 3.9% mixed industrial/office space.
Additionally, investors would also be taking a broad view on economic growth with REITs investments. Some investment experts argue that since commercial property has a larger presence in the U.S. economy than REITs do in the equities market, investors could benefit from a 5% to 10% allocation to REITs to bring their investments more in line with commercial property’s significance in the overall economy. [REIT ETFs Still Have a Place in an Investment Portfolio]
For more information on real estate investment trusts, visit our REITs category.
Max Chen contributed to this article.