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Real estate stock indices allow you to keep track of how the real estate sector is performing on the stock market. They are a useful way to see whether the shares of companies involved in building, managing or renting real estate are going up or down. And while it may sound complicated, it’s not that complicated.
In the following lines we review the main real estate indices to understand what they measure and why they are useful for those who want to invest without buying a home.
FTSE EPRA Nareit Europe: a snapshot of the European real estate sector
This index reflects the performance of large real estate companies in Europe. It includes both companies that own buildings and others that develop or lease them, known as REITs.
Its aim is to provide a clear view of the European real estate market on the stock exchange. That is, how the shares of companies that own or manage income-generating real estate are moving.
What is interesting is that this index serves as the basis for many investment products, such as exchange-traded funds (ETFs), which allow investment in the sector without the need to buy a home or premises.
An alternative that is aligned with the investment model of platforms such as wecity, where it is also possible to access the real estate market without the need to purchase a complete property.
MSCI World Real Estate: global exposure to the real estate sector
This index shows the performance of large and medium-sized real estate companies in 23 developed countries, including the United States, the United Kingdom, Germany, France and Japan.
Unlike the previous one, which focuses on Europe, the MSCI World Real Estate offers a global view. It includes everything from companies that manage data centers to logistics companies, warehousing and assisted living facilities.
This allows investors to have a more diversified exposure to the real estate sector, without concentrating on a single country or type of property. For those seeking profitability without the hassle of direct asset management, this type of index is a good reference.
S&P Global REIT Index: how to invest in international REITs
The S&P Global REIT index groups companies from both developed and emerging markets that operate as REITs. What is a REIT? Basically, they are companies that are in the business of leasing real estate and distributing most of the income in the form of dividends.
The interesting thing about this index is that it only includes publicly traded companies that regularly report earnings. For this reason, many use it as a reference to evaluate real estate investment opportunities from a more liquid and global perspective. In fact, if you are interested in how to invest in REITs from Spain, this index can be a good starting point.
In addition, it has frequent reviews to ensure that it is always a good reflection of the market. This type of transparency and liquidity makes it a useful tool for diversifying real estate investment without the time and cost of acquiring a traditional property.
S&P500 Real Estate Index: U.S. real estate companies.
This indicator brings together the real estate companies that are part of the S&P 500, which comprises the 500 largest listed companies in the United States.
Although it has a more limited focus, as it only analyzes the U.S. market and within a specific set of companies, it is useful to see how the sector behaves in a key economy such as the U.S. It includes well-known companies, such as Prologis or Digital Realty, working in sectors as diverse as data centers, warehouses or spaces for seniors.
This index is a good reference to closely follow the evolution of the real estate market in the United States. It can also serve as a general thermometer to know if it is a good time to invest in this type of assets.
What do all these indexes have in common?
Although each index has its own approach, they all share one idea: they allow you to follow the pulse of the real estate market without having to buy bricks and mortar. Instead of acquiring a home or premises, they invest in companies that are already generating income through rental or property management.
These indices are also the basis for many easy-to-contract investment products, such as ETFs. In fact, on platforms such as wecity, we are also committed to facilitating access to different real estate opportunities without complications: with investments starting from low amounts, without having to take out mortgages or manage the property.
How to invest in these indices?
Investing in real estate stock indexes does not require a great deal of knowledge or capital. The easiest way to do this is through index funds or ETFs (exchange-traded funds) that replicate these indices. For example, there are ETFs that track the FTSE EPRA Nareit Europe, the MSCI World Real Estate or the S&P Global REIT.
These products are available on many investment platforms, from traditional banks to digital brokers such as MyInvestor, Indexa Capital, Renta 4 or Degiro. All you have to do is open an account, search for the fund or ETF that replicates the desired index and invest the amount you want, starting from very low amounts.
Doing so provides diversified exposure to the real estate sector, without the need to purchase properties, manage tenants or assume additional costs such as renovations, insurance or taxes.
Conclusion
Real estate stock indices provide a simple way to understand how the sector is performing. They are also a useful reference when it comes to investing judiciously in the real estate sector, without the need to directly manage physical assets.
And while they are not a substitute for a direct investment in bricks and mortar, they do complement an investment strategy. diversified investment diversified investment strategy, especially if combined with solutions such as real estate crowdfunding. From the crowdfunding process you can invest in real projects from a digital platform such as wecity, without the need to be an expert.
