Top 10 Australian REITs to Watch in 2025

In Australia, Real Estate Investment Trusts (REITs) have become an important tool for investors to diversify their investment portfolios and obtain stable income. These trusts provide investors with the opportunity to participate in the real estate market by investing in commercial properties such as office buildings, retail centers, industrial facilities, and residential properties.

Following the recent RBA rate cut meeting in February, there is renewed interest in the real estate sector, as lower interest rates can boost property values and yields. This rate cut, the first since 2020, further enhances the appeal of REITs for investors. This article will focus on the top ten REITs in the Australian market that are worth investors' attention, opening the door for investors to achieve diversified asset allocation through REITs.

What are REITs?

REITs (Real Estate Investment Trusts) are a special type of company or fund that pools the capital of multiple investors to purchase and manage various types of real estate assets. The main purpose of REITs is to provide ordinary investors with an opportunity to invest indirectly in real estate without the need to directly own or manage properties. In this way, investors can benefit from rental income and potential capital appreciation from real estate.

Most countries require REITs to distribute the majority of their profits to shareholders in the form of dividends. Additionally, REITs are typically listed on stock exchanges, allowing investors to trade more easily and providing greater liquidity.

REITs can invest in a variety of real estate projects, including but not limited to office buildings, retail centers (shopping malls), hotels, industrial properties (warehouses and logistics centers), residential apartments, medical facilities, data centers, etc. This diversity is not limited to a single type of property but also covers different geographical locations from urban cores to suburbs.

There are many different classifications of REITs based on different attributes, among which investors need to note that REITs can be divided into corporate REITs and trust-type REITs according to their structure.

• Corporate REITs: Established in the form of a company, issuing shares and listed on stock exchanges. Investors become shareholders by purchasing shares.

• Trust-type REITs: More similar to funds, where investors buy trust units rather than shares, and income distribution is based on the trust agreement.

Top 10 Australian REITs on the ASX

Here are the 10 ASX-listed REITs that investors could keep an eye on.

Learn more about ASX-listed REITs>>

Goodman Group (GMG)

Goodman Group is a globally leading industrial real estate investment and management company, as well as the largest real estate group listed on the ASX. It focuses on the development and investment of logistics facilities, warehouses, and business parks, and provides investors with opportunities to participate in high-quality industrial properties through its funds. Goodman has an extensive business network in Australia, Europe, Asia, North America, and other regions, and is committed to meeting the demand for modern storage space from e-commerce, third-party logistics, and other industries.

Scentre Group (SCG)

Scentre Group is the owner and operator of Westfield shopping centers, which are located in major cities and regions across Australia and New Zealand. The company focuses not only on the infrastructure of the shopping malls but also on customer experience and service quality, including optimizing retail mix, planning marketing activities, and building digital platforms.

Stockland Corp Ltd (SGP)

Stockland is one of Australia's largest diversified property groups and also the country's largest residential developer. It operates in various sectors, including residential, commercial real estate (such as office buildings and retail centers), and retirement living communities. The company has a long history in land development and is particularly adept at creating integrated communities that include housing, workplaces, and recreational facilities.

Vicinity Centres (VCX)

Vicinity Centres is one of Australia's leading shopping center owners, holding and managing a portfolio of major regional shopping centers. The company focuses on asset management and capital allocation strategies to maximize shareholder value while ensuring long-term stable growth.

GPT Group (GPT)

GPT Group, as an Australian Real Estate Investment Trust (A-REIT), has a diversified range of business operations. Its business covers the investment management of office buildings, retail spaces, warehousing logistics, and business parks. The company is committed to increasing the value of its investment portfolio through efficient asset management practices and strategic acquisitions.

Mirvac Group (MGR)

Mirvac is a real estate investment company primarily focused on residential development. Its business includes the design, construction, sale, and property management of residential homes, apartments, office buildings, and commercial properties. As a responsible corporate citizen, Mirvac is committed to adhering to high standards of ethical conduct and governance principles in all its activities.

Dexus (DXS)

Dexus is an Australian Real Estate Investment Trust (A-REIT) established in 1984. It manages a portfolio of direct and indirect real estate investments, primarily consisting of high-quality office buildings, shopping centers, and infrastructure. The company has an experienced team capable of identifying and executing high-potential investment opportunities. Dexus also places a strong emphasis on Environmental, Social, and Governance (ESG) issues, striving to embody best practices in its operations.

Charter Hall Group (CHC)

Charter Hall specializes in the investment management of commercial real estate, particularly in industrial, office, and retail properties. The company is known for its strong fund management capabilities and in-depth industry knowledge, helping investors achieve their financial goals. Charter Hall continuously seeks investment opportunities in emerging markets and adapts to changing market demands through flexible investment structures.

National Storage REIT (NSR)

National Storage REIT focuses on investing in self-storage facilities, which allow customers to rent spaces of various sizes for storing personal or business items. NSR owns multiple modern self-storage properties nationwide, providing customers with convenient and secure storage solutions. As the demand for flexibility and convenience increases, the self-storage market is growing rapidly, and NSR is at the forefront of this trend.

Arena REIT (ARF)

Arena REIT is a real estate investment trust fund focused on educational facilities and healthcare, owning multiple childcare centers and providing pre-school care for children aged 0 to 5. Additionally, Arena REIT is widely recognized for its investments in key infrastructure such as schools, hospitals, and clinics.

How to invest in A-REITs?

A-REITs (Australian Real Estate Investment Trusts) are mostly listed and traded on the ASX, which means investors can buy and sell shares or units of A-REITs through the ASX just like they would with ordinary stocks. Therefore, investors can follow these steps to invest in A-REITs:

1. Choose the right trading platform: Based on your needs, such as trading frequency, fees, and customer service, select a platform that supports ASX trading, such as moomoo.

2. Open and verify a trading account: Register an account on the chosen platform and upload identification documents to complete verification. After the account is opened, transfer funds into the account to prepare for trading.

3. Select and determine the trading target: Use the platform's search functions and filtering tools to find and research A-REITs of interest, refer to professional advice to decide on the quantity and price to purchase, and submit the order.

4. Monitor and manage the investment portfolio: Regularly review the performance of your held A-REITs, adjust your investment strategy according to market changes and personal goals, and set reminders to respond to market dynamics in a timely manner.

Lastly, it's worth mentioning that investors can also quickly identify excellent REITs and real estate-related stocks on the ASX market using moomoo, which has established a "Real Estate" investment theme column for investors.

The pros of investing in Australian REITs

• High liquidity: By investing in ASX-listed A-REITs, investors can easily trade to indirectly gain exposure to real estate assets without the lengthy sales cycle or complex legal procedures required for directly purchasing properties.

• Low entry barrier: Investors can easily enter the real estate market by purchasing a small number of shares, without the need to pay the high down payments and other costs associated with directly buying properties or real estate.

• Professional management: A-REITs are operated by professional real estate management and investment teams who are responsible for asset selection, maintenance, leasing, and other matters, reducing the burden on individual investors.

• Stable income stream: Many A-REITs offer regular dividends, which are derived from rental income, providing investors with a relatively stable and predictable cash flow.

• Capital appreciation potential: Over time, if the value of the real estate market rises, the value of A-REITs may also increase, presenting opportunities for capital appreciation.

• Transparency and regulation: As publicly listed companies, A-REITs are subject to strict financial reporting and disclosure requirements, increasing transparency in the investment process and reducing the risk of information asymmetry.

The drawbacks of investing in REIT investments in Australia

• Market volatility: The prices of A-REITs are subject to the overall performance of the stock market, which means they can experience significant price fluctuations. Changes in market sentiment, economic conditions, or policy adjustments can cause the value of A-REITs to rise or fall.

• Leverage risk: Many A-REITs use debt to expand their investment portfolios. High levels of debt can amplify returns when market conditions are favorable, but they can also exacerbate the risk of losses in adverse conditions. If the loan-to-value ratio (LVR) is high, such as over 65%, this risk becomes particularly noteworthy.

• Lack of control: As minority shareholders in A-REITs, investors have little say in the specific investment decisions regarding properties. They cannot directly influence asset management strategies or choose specific times for buying or selling, which limits their control over the use of their funds.

• Property valuation risk: In some cases, the properties held by A-REITs may be overvalued, especially during overheated market periods. If the actual rental income is insufficient to support the current valuation, there is a risk of capital depreciation.

The Impact of rate cuts on Australian REITs

The market has a strong expectation for the Reserve Bank of Australia (RBA) to cut interest rates. Lucy Ellis, Chief Economist at Westpac Group, predicts that the RBA will cut interest rates in February next year. Adam Boyton, Head of the Australian Economic Department at ANZ Research, also said that based on the monetary policy statement and the press conference, his team maintains its previous judgment and still believes that the RBA will cut interest rates for the first time in February 2025.

It can be said that the probability of the RBA cutting interest rates in the coming period is relatively high. So, how will interest rate cuts affect the investment trends of A-REITs? Here are a few points summarized for investors:

Reduced financing costs: When the benchmark interest rate declines, REITs can borrow funds at a lower cost for acquiring new properties or refinancing existing debt. This helps to increase Net Operating Income (NOI) as interest expenses decrease. Lower borrowing costs also encourage the moderate use of leverage to expand the portfolio, potentially increasing shareholder returns.

Enhanced asset valuations: As market interest rates decrease, investors' required rate of return will also correspondingly decrease, meaning that capitalization rates (Cap Rates) may compress. The asset valuation of REITs is based on the discounting of their future cash flows. The compression of capitalization rates means that the same cash flow can support a higher property valuation, thereby driving up the stock prices of REITs.

Increased dividend appeal: In a low-interest rate or declining interest rate environment, the stable dividends provided by REITs will be more attractive compared to other fixed-income products, attracting investors seeking a stable income stream.

Stimulating market demand: Interest rate cuts are often accompanied by economic stimulus measures that promote business activities and personal consumption. This helps to increase the occupancy rates of commercial properties (such as office buildings, shopping malls, etc.) and may lead to an increase in rental levels. At the same time, for those REITs involved in residential development or holding, the decrease in mortgage interest rates may stimulate housing demand, further supporting the value of related assets.

Get started with Australian REITs

For investors looking to get involved in the Australian real estate market, Australian REITs offer a convenient and diversified investment pathway. From industrial and logistics properties (such as Goodman Group) to shopping centers (such as Scentre Group), and from office buildings to residential developments (like Stockland and Mirvac Group), A-REITs cover a broad range of property types, providing investors with stable dividend income and potential for capital appreciation. By investing in high-quality REITs, you can enjoy the benefits of professionally managed real estate assets while achieving a diversified asset allocation based on your personal investment objectives and risk preferences.

FAQs about A-REITs

What is the outlook for REITs in Australia?

The market outlook for Australian REITs is generally cautiously optimistic. According to analysts at CLSA, Australian REITs are expected to recover from the suppression of a high-interest-rate environment. The financial market widely anticipates that the Reserve Bank of Australia (RBA) will cut interest rates in early 2025, which will have a positive impact on the REITs market. The investment trends of Australian REITs may be influenced by this macroeconomic factor, showing a certain potential for growth.  

What is the largest REIT in Australia?

The largest REIT in Australia by market capitalization is Goodman Group (GMG). As a global industrial real estate group, its market value significantly exceeds that of other Australian REITs.