What exactly can REIT share prices tell us?
Because REITs are publicly traded, the general direction of their share prices tends to reflect market repricing more quickly than the private market does. REITs have to provide commentary on their performance to analysts on a regular basis, so there’s more visibility and more frequent adjustments in price than with privately held properties. Keep in mind that I’m talking about trends in REIT prices, not daily or weekly fluctuations. Did REITs predict the current problems that the commercial real estate market is experiencing? They did. As REITs have become a bigger part of institutional real estate ownership in the United States, Europe, and parts of Asia, they’ve become a much more effective indicator of market direction. At the start of the market downturn, REIT prices in the United Kingdom started to fall six months ahead of private indices. In the United States, prices started to decline about 12 months ahead of the general market. In both cases, REIT share prices started to refle
