Unlocking Opportunity: How Real Estate Investment Trusts Drive Growth in Emerging Markets

Robert Johnson|Real Estate|August 27, 2025

Photo by David Kristianto on Unsplash

Understanding Real Estate Investment Trusts in Emerging Markets

Real Estate Investment Trusts (REITs) have become a cornerstone of property investment in many emerging markets, offering both institutional and retail investors the chance to gain exposure to real estate assets without direct ownership. Unlike traditional property investments, REITs pool capital from multiple investors and invest in income-generating real estate, such as office buildings, shopping malls, and industrial parks. This structure allows for diversification, liquidity, and professional management.

REITs in emerging markets have shown rapid growth over the past decade. According to the Global Real Estate Transparency Index, the total value of listed REITs in emerging markets reached $20 billion in 2020 , highlighting their expanding role as a viable investment strategy for both local and international investors [1] . Notably, REITs in these regions often provide higher average annual returns-around 10% in 2020-compared with developed markets, though these higher returns are often paired with increased volatility and risk.

Key Features and Benefits of REITs in Emerging Markets

REITs typically offer several distinct advantages for investors in emerging markets:

Higher Return Potential: Due to economic expansion, urbanization, and a growing middle class, emerging markets often see higher property appreciation and rental growth, which can translate to stronger REIT performance. For instance, the average annual return for REITs in these markets was about 10% in 2020, outpacing many developed market counterparts [1] .
Portfolio Diversification: Investing in REITs allows investors to diversify exposure across property types and geographies, reducing risk and smoothing returns. Since real estate cycles in emerging markets may not always move in tandem with global trends, this can help balance an international investment portfolio.
Liquidity: Most REITs are traded on local stock exchanges, making it easier to buy or sell shares than with direct property ownership.
Professional Management: REITs are professionally managed, reducing the burden on individual investors to handle property operations, tenant management, and regulatory compliance.

Challenges and Risks Associated with Emerging Market REITs

Despite the compelling benefits, investing in REITs in emerging markets comes with unique challenges:

Market Volatility: Higher returns often come with higher risk. Market volatility in these regions can be driven by political instability, regulatory changes, and currency fluctuations.
Legal and Regulatory Risks: Property rights, tax laws, and REIT regulations may not be as robust or predictable as in developed markets. Investors should conduct careful due diligence and consult local experts before committing capital [1] .
Transparency and Disclosure: Emerging markets may lack the financial transparency and disclosure standards present in more developed economies, increasing the importance of selecting REITs with strong governance and reputable management.
Currency Risk: Fluctuations in local currencies can impact returns for foreign investors, especially when local currency depreciates against the investor’s home currency.

Examples and Case Studies: REITs in Practice

Several emerging markets have successfully developed REIT frameworks to attract both local and international investment. For example:

Brazil: The Brazilian REIT market is diverse, with over 950 funds (known locally as FIIs) representing nearly BRL 190 billion in net assets. Brazilian REITs can invest in traditional properties as well as fixed income securities, providing flexibility for different investor objectives [2] .
India: REITs have become a vital funding source for the commercial property sector, with total assets exceeding $20 billion in 2020. Indian REITs are traded on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), and have attracted significant foreign capital [1] .
Other Markets: Turkey and the United Arab Emirates are among other countries where REIT markets are gaining traction, though their overall market weights remain relatively small compared to larger economies [2] .

Global indices, such as the MSCI Emerging Markets IMI Core REIT Index , track the performance of REITs across 24 countries, offering a benchmark for investors and fund managers to assess market trends and compare returns [3] .

How to Access REIT Investments in Emerging Markets

There are several pathways for investors to access REITs in emerging markets:

Direct Purchase of Listed REIT Shares: Investors can buy shares of publicly listed REITs on local stock exchanges. For instance, in Brazil, REIT shares are traded on the B3 exchange; in India, they are available on the BSE and NSE. To do this, you typically need to open a brokerage account with a firm that offers access to these markets. International brokerages such as Interactive Brokers, Charles Schwab, and Fidelity may provide access to select emerging market exchanges. Before proceeding, confirm with your broker which markets are supported.
Invest Through Exchange-Traded Funds (ETFs): Some global ETFs track the performance of REITs in emerging markets. For example, ETFs based on the MSCI Emerging Markets IMI Core REIT Index offer exposure to a wide selection of REITs across multiple countries. Check with your financial advisor or brokerage platform for availability and suitability.
Participate in Local REIT Offerings: Some countries allow retail or institutional investors to participate in initial public offerings (IPOs) of new REITs. Keep abreast of regulatory announcements and financial news in your target market, as IPOs often require specific documentation and a local brokerage relationship.
For Institutional Investors: Consider working directly with fund managers or asset management companies that specialize in emerging market real estate. These professionals can provide tailored exposure and assist with due diligence, regulatory compliance, and ongoing management.

Step-by-Step Guide: Investing in Emerging Market REITs

Research Target Markets: Begin by identifying which emerging markets align with your risk tolerance, investment horizon, and sector preferences. Review country-level REIT frameworks, market performance, and legal requirements.
Choose Your Investment Approach: Decide whether you prefer direct investment in listed REITs, indirect exposure through ETFs, or participation in private placements or IPOs. Each approach has different liquidity, risk, and regulatory implications.
Open an Appropriate Brokerage Account: If investing directly, ensure your brokerage account supports the relevant exchanges. For ETF investments, check if your chosen platform lists funds tracking emerging market REIT indices.
Conduct Due Diligence: Analyze the performance, management, asset types, and transparency of your shortlisted REITs or ETFs. Consult annual reports, independent research, and regulatory filings for insight into governance and risk management.
Monitor and Adjust: Emerging markets can be dynamic, with rapid changes in regulation, currency, and macroeconomic conditions. Review your portfolio regularly and rebalance as needed to stay aligned with your goals.

Alternatives and Best Practices

If you encounter barriers to direct investment-such as limited brokerage access, regulatory restrictions, or currency controls-consider the following alternatives:

Global Real Estate Mutual Funds: Some mutual funds offer managed exposure to REITs and property companies in emerging markets, often with lower minimum investment requirements.
Consult Local Financial Advisors: Engage a qualified advisor familiar with your target market’s real estate sector and regulations. They can help identify opportunities, support due diligence, and optimize your investment strategy.
Stay Updated on Regulatory Changes: Many emerging markets are actively refining their REIT frameworks. Monitor market news, regulatory bulletins, and industry association reports for updates that may affect your investment.

Potential Challenges and Solutions

Investing in emerging market REITs is not without hurdles. Investors may face difficulties with market access, regulatory complexity, and currency volatility. To mitigate these challenges:

Work with global brokerage platforms that offer multi-market access;
Consider currency-hedged investment products to reduce the impact of exchange rate swings;
Stay informed about political and legal developments through reputable news outlets and regulatory agency updates;
Use diversified, index-based strategies to spread risk across markets and property types.

Final Thoughts and Next Steps

REITs in emerging markets present unique opportunities for growth, diversification, and portfolio enhancement. However, these potential rewards come hand-in-hand with higher risk, requiring careful research, due diligence, and strategic planning. To access these opportunities, begin by identifying the markets and REITs that align with your goals, work with reputable brokers and advisors, and monitor your investments closely. For more information on specific REITs, consult the investor relations sections of local exchanges, utilize global index providers like MSCI, and stay informed through industry associations and financial news sources.