Although real estate securities have appreciated sharply in recent years, investors eyeing this asset class have additional opportunities now: putting money into foreign real estate funds. The concept of real estate investment trusts (REITs), which has been popular in the U.S., is spreading around the world. REITs trade like stocks and foreign property owners like that idea, realizing that a lack of liquidity lowers property values.
Thus, REITs and REIT-like structures already exist in Asia and they are now coming to Europe. In Germany, for example, there was a great deal of speculative building after the reunification with East Germany. Property values there have been stagnant for 10 years but the excess supply finally has been absorbed so this might be the time to buy.
Fortunately, you don’t have to travel to Germany or other countries to hunt for bargains. An increasing number of mutual funds and exchange-traded funds (ETFs) that hold foreign real estate are available to U.S. investors. Fidelity International Real Estate Fund, for example, focuses on European, Asian, and Australian securities.
