Real Estate to Get Its Own Stock Category
Real estate companies have been included in a category with banks and insurance firms since 1999 in stock markets across the globe. But that soon will change. Come Thursday, real estate will be getting its own dedicated category.
The Wall Street Journal reports that the move likely will prompt analysts to pay closer attention to real estate investment trusts.
The Global Industry Classification Standard separates companies into 10 industries, like energy and health care. The groupings allow investors to follow broad trends. But the new category for real estate will now make number 11 in the groupings.
The growth of the real estate sector has prompted it to get its own category. The market capitalization is $1.48 trillion and accounts for 3.5 percent of the global equities market, according to the European Public Real Estate Association. What’s more, REITs have been one of the top performing asset class for more than 20 years. U.S. REITs total returns over the past 25 years are 12 percent compared with 9 percent for the S&P 500, according to Green Street Advisors.
“There is going to be more money looking at the sector,” says Matthew Norris, executive director for a real estate fund at the Grosvenor Group, a London-based property firm. “This is going to bring real estate into focus.”
Source: “Real-Estate Shares to Get Own Sector,” The Wall Street Journal (Aug. 30, 2016)