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Investement Notes

U.S. REIT Market Loses Dominance

After decades of being the dominant REIT market, the United States has been eclipsed by the rest of the world, according to a recent report issued by global consulting firm Ernst & Young.

Michael Frankel, Ernst & Young's global director of REIT Services, says there's been a dramatic shift in REIT formation away from North America and toward Asia and Europe in the last 12 months.

Asia and Europe's REIT markets have experienced a tremendous outpouring of capital and REIT regimes in the U.K and Turkey have helped the rest of the world surpass the U.S. for the first time in total number of REITs. Moreover, recent or pending REIT legislation in the UK, Germany and Italy is just beginning to fuel growth in the global REIT sector.

In 2006, North America was home to 253 public REITs compared to 198 REITs throughout the rest of the world. As of June 2007, the rest of the world housed 253 REITs compared to 195 in North America. However, the United States remains the largest single REIT market with 169 REITs.

Although the U.S. lost almost a quarter of its REITs through privatization and mergers, the report noted that total market capitalization of publicly-listed REITs around the world reached $764 billion in June 2007, up from $608 billion a year ago. This represents more than 25 percent growth in the last 12 months despite what happened in the U.S. REIT market.

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