In this article, we discuss 10 best real estate ETFs to buy. If you want to skip our discussion on the real estate market, head over to 5 Best Real Estate ETFs To Buy Now.
Despite economic challenges worldwide, real estate industry leaders surveyed by PwC are hopeful for a potential uptick in investment activity, driven by further clarity on monetary policy in key regions like the United States, Europe, and the Asia Pacific. They anticipate stakeholders in property transactions to adjust to higher interest rates, facilitating agreement on pricing. While the real estate sector has faced a notable downturn, there is optimism about recovery, though it is more pronounced in 2025 than in 2024. The real estate industry has shifted its focus from short-term concerns to a longer-term outlook, with attention shifting towards “the three Ds” – demographics, digitalization, and decarbonization. This transition is reshaping real estate dynamics, with sustainability playing a central role. Factors like ESG performance and alignment with employee values are increasingly influential in companies’ real estate decisions, with offices evolving to reflect sustainability goals. Changing occupier preferences and technological advancements are transformational forces within the corporate office sector, highlighting the importance of high-quality, sustainable spaces. Embracing innovation and delivering value beyond physical space are identified as key strategies to remain competitive in an evolving market.
According to Jones Lang LaSalle Incorporated (NYSE:JLL), the belief that interest rates have reached their peak could lead to an uptick in real estate transactions and stabilization of prices, although it may take time for available capital to be fully utilized. Opportunities for growth are present in specific sectors, geographic areas, distressed assets, and portfolio adjustments. Sectors like living spaces, driven by urbanization and demographic shifts, are expected to continue performing well. The trend towards regionalization and local manufacturing is anticipated to persist in 2024, driving demand for industrial and logistics properties. Retail is also showing signs of recovery, attracting investors as supply and demand dynamics evolve. Data centers are projected to experience significant growth, propelled by advancements in artificial intelligence and changing location preferences. In 2024, occupiers of real estate will focus on solidifying workplace policies and aligning portfolios with evolving work trends. Sustainability will remain a focal point, with rising demand for environmentally friendly buildings and workspaces.
As per a recent CNBC report, the United Kingdom appears positioned to lead a revival in European real estate this year as foreign investors inject funds into the region’s challenged property market. A projected decrease in interest rates and modest economic growth are attracting overseas investors drawn to more appealing pricing levels, according to recent research from Savills. Investors from the United States, Israel, Japan, and Taiwan are expected to drive a 20% increase in real estate investment activity in 2024, focusing on the United Kingdom, Germany, Spain, and the Netherlands. Rasheed Hassan, Savills’ head of global cross-border investment, expressed confidence in the recovery, highlighting the UK’s attractive market characteristics such as its depth, accessibility, and limited domestic competition. London emerged as the top destination for cross-border investment in CBRE’s 2024 European Investor Intentions Survey, followed by cities like Paris, Madrid, Amsterdam, and Berlin. The UK is forecasted to attract a significant portion of outbound investment, with estimates suggesting around $13 billion from the United States alone. Germany, Spain, and the Netherlands are also expected to benefit from US investment. Logistics and residential properties are anticipated to be the primary beneficiaries of overseas investment in 2024, surpassing offices as preferred asset classes for investors.
Some of the best real estate stocks to buy include Public Storage (NYSE:PSA), CoStar Group, Inc. (NASDAQ:CSGP), and CubeSmart (NYSE:CUBE). However, we discuss the best real estate ETFs in this article.
Our Methodology
We curated our list of the best real estate ETFs by choosing consensus picks from multiple credible websites. We have mentioned the 5-year share price performance of each ETF as of March 29, 2024, ranking the list in ascending order of the share price performance. We have also discussed the top holdings of the ETFs to offer better insight to potential investors.
A bustling business center with a skyline of buildings behind it, representing the company’s success in the real estate sector.
Best Real Estate ETFs To Buy Now
10. Vanguard Real Estate Index Fund ETF Shares (NYSE:VNQ)
5-Year Share Price Performance as of March 29: -1.55%
Vanguard Real Estate Index Fund ETF Shares (NYSE:VNQ) focuses on stocks issued by real estate investment trusts. These REITs invest in different types of real property such as office buildings and hotels. Vanguard Real Estate Index Fund ETF Shares (NYSE:VNQ) aims to closely mirror the performance of the MSCI US Investable Market Real Estate 25/50 Index. The fund was established on September 23, 2004. As of February 29, 2024, the fund holds 159 stocks in its portfolio, with net assets of $63.7 billion and an expense ratio of 0.12%. It is one of the best real estate ETFs to buy.
Prologis, Inc. (NYSE:PLD) is the largest equity holding of Vanguard Real Estate Index Fund ETF Shares (NYSE:VNQ). Prologis, Inc. (NYSE:PLD) is a major player in logistics real estate, leasing logistics facilities to business-to-business and retail/online fulfillment customers. On February 22, Prologis, Inc. (NYSE:PLD) declared a $0.96 per share quarterly dividend, a 10.3% increase from its prior dividend of $0.87. The dividend was paid on March 29.
According to Insider Monkey’s fourth quarter database, 46 hedge funds were bullish on Prologis, Inc. (NYSE:PLD), compared to 48 funds in the prior quarter.
Like Public Storage (NYSE:PSA), CoStar Group, Inc. (NASDAQ:CSGP), and CubeSmart (NYSE:CUBE), Prologis, Inc. (NYSE:PLD) is one of the best real estate stocks to buy.
Third Avenue Real Estate Value Fund stated the following regarding Prologis, Inc. (NYSE:PLD) in its fourth quarter 2023 investor letter:
“Prologis, Inc. (NYSE:PLD) (a U.S.-based Industrial and Logistics REIT) held a capital markets forum, where the management team reviewed the evolution of the business and highlighted their “customer focus”. The team also covered several material value-drivers, including: (i) the “loss-to-lease” opportunity within the existing portfolio with market rents approximately 60% above in-place leases, thus representing nearly $3.0 billion of incremental cash flow3 that can be realized as leases renew, (ii) a 12k acre landbank that can accommodate more than 200 million square feet of additional properties, which is increasingly being used to deliver datacenters given the higher capital values relative to industrial properties, and (iii) its Essentials segment, including the addition of rooftop solar panels at many facilities, which currently account for 555 Megawatts (“MW”) of installed capacity (and generates $40 million of operating profits) but is expected to comprise 7000 MW of capacity by 2030 (and generate approximately $800 mm of annual profits).”
9. iShares Residential and Multisector Real Estate ETF (NYSE:REZ)
5-Year Share Price Performance as of March 29: 1.91%
iShares Residential and Multisector Real Estate ETF (NYSE:REZ) aims to mirror the performance of the FTSE Nareit All Residential Capped Index. This index consists of US real estate equities focused on residential, healthcare, and self-storage sectors. It is one of the best real estate ETFs to buy. As of March 28, 2024, iShares Residential and Multisector Real Estate ETF (NYSE:REZ) holds $623.5 million in net assets, along with an expense ratio of 0.48% and a portfolio comprising 37 stocks.
Welltower Inc. (NYSE:WELL) is the largest holding of the iShares Residential and Multisector Real Estate ETF (NYSE:REZ). Welltower invests in real estate and infrastructure to support the expansion of innovative care delivery models and enhance wellness and healthcare experiences. The company paid a $0.61 per share quarterly dividend on March 7.
According to Insider Monkey’s fourth quarter database, 31 hedge funds were bullish on Welltower Inc. (NYSE:WELL), up from 18 funds in the last quarter.
Here is what Baron Real Estate Income Fund has to say about Welltower Inc. (NYSE:WELL) in its Q3 2023 investor letter:
“Welltower Inc., an owner and operator of senior housing and medical office buildings, was a contributor to performance during the quarter due to strong cash-flow growth in its senior housing portfolio driven by healthy rent growth and occupancy gains, robust demand from new residents, improving labor expenses, and superior capital deployment by management. Welltower owns and operates senior housing and medical office buildings in the U.S. and internationally. We believe the company continues to be well-positioned to benefit from cyclical and secular growth over the coming years and has a credible path to double its senior housing operating cash flow organically over the next four to five years. In addition, we believe the current constrained financing environment will create attractive external growth opportunities for the company to acquire quality assets at attractive prices.”
8. Dimensional Global Real Estate ETF (NYSE:DFGR)
5-Year Share Price Performance as of March 29: 2.12%
Dimensional Global Real Estate ETF (NYSE:DFGR) aims to achieve long-term capital appreciation. The fund benchmarks its performance against the S&P Global REIT Index. As of February 29, 2024, Dimensional Global Real Estate ETF (NYSE:DFGR)’s net assets totaled $1.5 billion, and the fund features an expense ratio of 0.22%. It is one of the best real estate ETFs to buy.
American Tower Corporation (NYSE:AMT) is one of the top holdings of Dimensional Global Real Estate ETF (NYSE:DFGR). American Tower Corporation (NYSE:AMT) is a global REIT that specializes in operating and developing multitenant communications real estate. On March 15, the company declared a quarterly dividend of $1.62 per share. The dividend is payable on April 26, to shareholders on record as of April 12.
According to Insider Monkey’s fourth quarter database, 56 hedge funds were long American Tower Corporation (NYSE:AMT), compared to 60 funds in the prior quarter.
Baron Real Estate Fund stated the following regarding American Tower Corporation (NYSE:AMT) in its fourth quarter 2023 investor letter:
“Early in 2023, we sold the majority of our position in American Tower Corporation (NYSE:AMT), a global operator of over 200,000 wireless towers, and even further reduced our modest position in the third quarter of 2023. We had concluded in late 2022 and early 2023 that growth expectations were too high given forthcoming headwinds from significantly higher financing costs (20%-plus exposure to floating rate debt), upcoming debt maturities, continued payment shortfalls from a key tenant in India, foreign exchange headwinds, and a reduction in mobile carrier capital expenditures.
Following a sharp decline in American Tower’s shares in the first nine months of 2023, we began rebuilding our position because we believed that the company’s shares had become more attractively valued, growth headwinds were better understood, and the potential monetization event of its India business would ultimately be value accretive to its business. Further, we believe that 2023 will mark the trough in earnings growth for American Tower and growth should reaccelerate in the next few years.”
7. iShares U.S. Real Estate ETF (NYSE:IYR)
5-Year Share Price Performance as of March 29: 2.22%
iShares U.S. Real Estate ETF (NYSE:IYR) aims to replicate the performance of the Dow Jones U.S. Real Estate Capped Index, which comprises US equities within the real estate sector. The ETF was established on June 12, 2000. As of March 28, 2024, iShares U.S. Real Estate ETF (NYSE:IYR)’s net assets amounted to $4.2 billion, and the fund featured an expense ratio of 0.40%, along with a portfolio comprising 72 stocks. It is one of the best real estate ETFs to buy.
Equinix, Inc. (NASDAQ:EQIX) is one of the top holdings of the iShares U.S. Real Estate ETF (NYSE:IYR). Equinix, Inc. (NASDAQ:EQIX) is an American multinational REIT that specializes in Internet connection and data centers. The company paid a $4.26 per share quarterly dividend to shareholders on March 20.
According to Insider Monkey’s fourth quarter database, 56 hedge funds were bullish on Equinix, Inc. (NASDAQ:EQIX), up from 42 funds in the last quarter.
RiverPark Advisors made the following comment about Equinix, Inc. (NASDAQ:EQIX) in its Q3 2023 investor letter:
“Equinix, Inc. (NASDAQ:EQIX): EQIX, a position we have held before, is a REIT that provides a global web of network-neutral, multi-tenant data centers that allow enterprises to bring together and interconnect the infrastructure required to compete in the digital economy. The company operates 248 data centers in 32 countries and 72 markets. These data centers sit on top of the cable infrastructure and house the internet service provider equipment that connects and powers the internet.
The company charges tenants rent for colocation space, plus metered power and interconnects utilized. EQIX’s revenue growth is driven by price increases, greater cross-connect utilization, and new data center development. We believe the company can compound revenue at more than 10% a year over the next five years, and more than double Funds From Operations (FFO). We re-initiated a small position in August.”
6. iShares Cohen & Steers REIT ETF (BATS:ICF)
5-Year Share Price Performance as of March 29: 2.82%
iShares Cohen & Steers REIT ETF (BATS:ICF) aims to replicate the performance of an index consisting of US real estate investment trusts. Its reference benchmark is the Cohen & Steers Realty Majors Index. As of March 28, 2024, the fund owns $2.10 billion in net assets, with a portfolio of 30 stocks and an expense ratio of 0.33%. iShares Cohen & Steers REIT ETF (BATS:ICF) ranks 6th on our list of the best real estate ETFs.
Simon Property Group, Inc. (NYSE:SPG) is one of the top holdings of iShares Cohen & Steers REIT ETF (BATS:ICF). Simon Property Group, Inc. (NYSE:SPG) is a prominent real estate investment trust specializing in premier shopping, dining, entertainment, and mixed-use properties. Simon Property Group, Inc. (NYSE:SPG) paid a $1.95 per share quarterly dividend to shareholders on March 29.
According to Insider Monkey’s fourth quarter database, 27 hedge funds were long Simon Property Group, Inc. (NYSE:SPG), same as the prior quarter.
In addition to Public Storage (NYSE:PSA), CoStar Group, Inc. (NASDAQ:CSGP), and CubeSmart (NYSE:CUBE), Simon Property Group, Inc. (NYSE:SPG) is one of the best real estate stocks to invest in.
Baron Real Estate Income Fund made the following comment about Simon Property Group, Inc. (NYSE:SPG) in its Q4 2022 investor letter:
“Simon Property Group, Inc. (NYSE:SPG) is the world’s largest mall operator. Led by CEO David Simon, the company has assembled a well-located portfolio of retail malls, outlets, and community centers. Management has a long track record of solid capital allocation decisions.
Simon’s dividend yield of 6% and valuation of only 10.6 times earnings (AFFO) versus a long-term average of 15 times earnings is, in our opinion, compelling.
Though we are mindful of the headwinds to certain retail real estate–excess supply of retail real estate, e-commerce headwinds, large capital requirements to repurpose retail real estate to higher and better alternative uses–we believe Simon Property is well positioned given the strong location and high quality of its real estate portfolio. We are managing the Fund’s investment in the company with possible retail headwinds in mind.”
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Disclosure: None. 10 Best Real Estate ETFs To Buy Now is originally published on Insider Monkey.