With a REIT share, it is possible to invest in passive real estate. As a result, it is possible to receive regular income from REIT shares.
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REIT: Investing in Passive Real Estate
What is a REIT stock?
Imagine you could invest in real estate without having to deal with tenants, repairs, or mountains of paperwork. That's exactly what a... is offering you REIT stock (Real Estate Investment Trust). This is a publicly traded real estate company.
By buying a REIT share, you become co-owner of a real estate portfolio (offices, shopping centers, housing, etc.), managed by professionals.
Your role? To receive dividends (the equivalent of the rent) and let the company take care of the rest*
How does a REIT share work?
It's simple, here's the process in 4 steps :
- You invest You buy REIT shares on the stock exchange, just like any other stock.
- The REIT invests : With shareholders' money, the company buys and manages real estate.
- You receive dividends The REIT redistributes at least 90 % of its income (rents, capital gains) in the form of dividends, proportional to your investment.
- You will declare your income : As with any dividend, taxes will have to be paid (we'll talk about that right after).
What are the conditions for a company to be a REIT?
To benefit from tax advantages, a REIT must comply with strict rules:
- Distribute 90 % of its income to the shareholders (hence the high dividends).
- Investing 75 % of one's assets in real estate.
- Draw 75 % from his income rents or real estate activities.
👉 Why is this interesting to you?
These conditions ensure that the REIT focuses on rental properties and not on other activities. Result: regular dividends and total transparency.
Diversification: How to limit the risks?
A REIT can be more or less diversified depending on the assets she owns:
- Limited diversity = High risk (e.g., a REIT specializing in hotels may suffer in the event of a tourism crisis).
- Very diverse = Reduced risk (e.g., a REIT that owns offices, housing, and warehouses).
💡 My advice
For a optimal diversification, opts for a ETF REIT :
- A REIT ETF groups dozens (or even hundreds) of REITs in a single product.
- Example: One Global REIT ETF invests in the best REIT stocks worldwide.
👉 Advantage You benefit from a global real estate exposure without having to choose each REIT yourself.
Performance of REIT ETFs: What does history say?
I analyzed the performance of several REIT ETFs on 5 and 10 years old (Data up to 2025). Here are the results:
🔹 5-year performance (2019–2024)
| ETF Type | Cumulative performance (excluding dividends) | Annualized dividends |
|---|---|---|
| Global REIT ETF | +26 % | ~3,25 % |
| US REIT ETF | +10 % | ~3,25 % |
| S&P 500 ETF | +90 % | ~1,5 % |
👉 Key takeaways :
- REIT ETFs did not achieve great success in terms of growth (especially the Global).
- However, their dividends are rather high (3.25 % on average).
10-year performance (until 2025)
| ETF Type | Annualized return |
|---|---|
| S&P 500 ETF | 14,58 % |
| US REIT ETF | 6,56 % |
| Global REIT ETF | 4,61 % |
👉 Conclusion :
A REIT ETF brings in less than a broad, multi-sector ETF like the S&P 500, but it offers higher dividends.
REIT ETFs vs High Dividend ETFs: Who Wins?
I compared REIT ETFs with ETF “High Dividends” (e.g., HDV in the United States):
| Criteria | US REIT ETF | US High Dividend ETF |
|---|---|---|
| Performance (5 years) | +10 % (cumulative) | +28 % (cumulative) |
| Performance (10 years) | 6.56 % (annualized) | 9,72 % (annualized) |
| Annualized dividends | 3.24 % (annualized) | 3,85 % (annualized) |
👉 Verdict :
- Growth The High Dividend ETF crushed largely the competition.
- Dividends The High Dividend ETF distributes more than a global REIT ETF (3.85 % vs 3.24 %).
💡 For what ?
A High Dividend ETF invests in several sectors (energy, health, etc.), whereas a REIT ETF is 100 % real estate. Diversification works in its favor.
REIT taxation in Switzerland: How much do you end up with?
In Switzerland, REIT dividends are taxed:
- Withholding tax of the dividend: Between 15 % and 35 % depending on the country of the REIT.
- Partial recovery You can recover 15 % to 20 % via your tax return.
👉 Net result :
- Estimated final tax : ~15 % on dividends.
- Example If a REIT distributes 3.25 % of dividends, you still have ~2,8 % after taxes.
Net performance after tax (example: Global REIT ETF 2019–2024)
REIT ETFs are not known for their growth, which is often close to zero over the long term. Therefore:
- Stock performance : ~0 %
- Net dividends : ~2,8 % (after 15 % of taxes)
In conclusion, the net annualized return of an ETF isn't particularly impressive. However, it's a very simple investment to manage.
Fees: ETF REIT, SCPI and rental property
To properly compare these three ways of investing in real estate, it is necessary to distinguish entry fees, annual fees, and resale fees.
Here is a table to estimate the costs of these 3 ways to invest in real estate; ;
| Investment | Entrance fees | Annual fees / management | Other costs | Fee level |
|---|---|---|---|---|
| Global REIT ETF | ~0 % | ~0.20–0.50 %/year (TER) | brokerage | 🟢 Low |
| SCPI | ~8–12 % | ~8–10 % of rents | Transfer fees according to SCPI | 🟠 High |
| Direct rental real estate | ~7–8 % in the old | ~1–2 % of the value/year* | renovations, vacancy, insurance, management… | 🔴 Variable/High |
* Order of magnitude: this is not a single "management fee", but an indicative budget for charges, maintenance, insurance, management, non-recoverable property tax, etc. The actual amount depends heavily on the property.
We conclude as follows:
🟢 Global REIT ETF: the cheapest
This is generally the most effective investment in terms of recurring costs. Some real estate ETFs are even around 0.13 % per year: the Vanguard Real Estate ETF, for example, currently shows 0,13 % of current expenses.
On €50,000, 0.30 % represents only €150 per year.
The main drawback of a REIT ETF is volatility, which can be average depending on the REIT ETF.
🟠 SCPI: high but shared fees
SCPIs generally have 5 to 12 % entrance fees, in addition to management fees deducted from revenue. The AMF indicates a range of 5–12 % at the entrance And 8–10 % of revenue for management.
On €50,000, The 10 % entrance fee represents approximately €5,000.
However, be aware: management fees are generally already integrated into distributed performance. Therefore, we should not deduct another 8–10 % from the announced yield.
🔴 Direct rental real estate: high and less visible costs
Direct purchase mainly entails a large initial cost: acquisition costs are currently around 7–8 %, with a possible increase linked to registration fees from April 2025.
Next come the recurring costs: property tax, non-recoverable condominium fees, insurance, maintenance, repairs, rental management, periods of vacancy, etc. The Notaries of France indicate that a gross yield of 4–5 % can lose approximately 1 to 1.5 points once the charges have been taken into account.
In summary
- REIT ETF → very low fees, very liquid, but stock market volatility.
- SCPI → entry fees are rather high, but management is fully delegated and the real estate is pooled. Average liquidity.
- Direct real estate → high intermediate costs and much more work, tied-up capital and specific risks.
👉 For €50,000, The difference is striking: A REIT ETF at 0.30 % costs ~€150/year, whereas a SCPI can have ~€5,000 entry fee on an equivalent sum. In direct real estate, you should rather expect several thousand euros in acquisition costs from the start.
REIT ETFs vs Physical Real Estate: Which is the best choice for you?
| Criteria | ETF REIT | Physical real estate |
|---|---|---|
| Management | ✅ Passive (no tenants to manage) | ❌ Active (rent, repairs, etc.) |
| Costs | ~0.20 % (TER) | ❌ High costs (notary fees, renovations, property tax) |
| Diversification | ✅ Global (via an ETF) | ❌ Limited (unless you buy multiple items) |
| Gross yield | ~3–4 % (dividends) + moderate growth | Variable (depends on the local market) |
| Liquidity | ✅ Immediate (stock market sale) | ❌ Long (sale of a property) |
👉 My opinion :
The REIT ETF is simpler, cheaper, more diversified and more likely to be more profitable than physical real estate.
I would hesitate between a global REIT ETF and a diversified European SCPI.
Global REIT ETF vs. European SCPI
These two investments allow you to invest in real estate without directly buying an apartment or building, but their operation is very different.
🟢 Global REIT ETF: simplicity, liquidity and diversification
A global REIT ETF invests in listed real estate companies worldwide: offices, shopping centers, housing, hotels, warehouses, data centers, etc.
Benefits :
- Very low fees compared to SCPIs.
- Global diversification in a single investment.
- High liquidity : buying and selling possible on the Stock Exchange.
- No tenants, maintenance or management to handle.
- It is possible to invest gradually with small amounts.
- Very easy to integrate into a diversified investment portfolio.
Disadvantages:
- The value can fluctuate, like an action.
- The price can fall even if the buildings owned by the companies remain occupied.
- Dividend taxation is not optimal in Switzerland (low growth, high dividends).
- Exposure to financial markets and, depending on the ETF, to foreign currencies.
- Distributed income may vary.
In summary: The REIT ETF is particularly suited to the investor who is looking for diversification, liquidity and low costs, and who accepts the volatility of financial markets.
🟠 European SCPI: physical real estate and potentially more regular income
A European real estate investment trust (REIT) buys and directly manages buildings, often spread across several European countries. The investor holds shares in the REIT and receives a share of the rental income.
Benefits :
- Access to’commercial real estate with relatively little capital.
- Fully delegated management: no tenants or work to manage yourself.
- Diversification across multiple properties and sometimes multiple countries.
- Potentially more regular income than that of a REIT ETF.
- European SCPIs can present a Significant tax benefits for certain tax residents, particularly when the buildings are located in countries where property taxation is favorable.
- The stock is not directly listed on the stock exchange and therefore does not experience the same daily fluctuations.
Disadvantages:
- High entry fees, often several percent.
- Liquidity much lower than an ETF: resale can take time.
- Performance is not guaranteed.
- Risk of a decline in the value of the shares.
- Taxation becomes more complex when the SCPI owns properties in several countries.
- We need to analyze the quality of the assets, the debt, the occupancy rate and the strategy of the management company.
In summary: The European SCPI is more suitable for the investor who is looking for real estate income, completely passive management, and direct exposure to real estate, by accepting higher fees and less liquidity.
🏆 Which to choose: SCPI or Global REIT ETF?
There is no universal winner.
| Criteria | Global REIT ETF | Diversified European SCPI |
|---|---|---|
| Diversification | ⭐⭐⭐⭐⭐ | ⭐⭐⭐⭐ |
| Past yield | ⭐⭐⭐ | ⭐⭐⭐⭐ |
| Costs | ⭐⭐⭐⭐⭐ | ⭐⭐ |
| Liquidity | ⭐⭐⭐⭐⭐ | ⭐⭐ |
| Simplicity | ⭐⭐⭐⭐⭐ | ⭐⭐⭐⭐⭐ |
| Regular income | ⭐⭐⭐ | ⭐⭐⭐⭐ |
| Visible volatility | 🔴 High | 🟢 Seemingly weak |
| International taxation | ⭐⭐⭐⭐* | ⭐⭐⭐* |
| Ease of declaring the property | ⭐⭐⭐⭐⭐ | ⭐⭐⭐* |
| Passive management | ⭐⭐⭐⭐⭐ | ⭐⭐⭐⭐⭐ |
* Taxation depends heavily on the country of residence and the countries in which the SCPI owns its properties.
In my analysis, a global REIT ETF offers more advantages than all individual SCPIs combined. However, some SCPIs have historically been more profitable.
🔎 REIT ETF: A good investment for you?
✅ Key features
- Passive income : Regular dividends (~3–4 %).
- Easy diversification : A Global REIT ETF covers the entire world.
- No management No tenants, no repairs, no paperwork.
- Very low fees for a real estate investment approximately 0.20% + brokerage fees
❌ Weak points
- Limited Growth : Historically worse than an S&P 500 or High Dividend ETF.
- Taxation Dividends are taxed (even if partially recoverable).
- High fees for an ETF : Slightly higher than a classic ETF (0.15–0.30 %).
REIT: Investing in Passive Real Estate
Conclusion: Should you invest in REITs?
According to my analysis, REIT ETFs are not essential., but they can be a nice addition For :
✔ Diversify your portfolio with real estate.
✔ Generate passive income (dividends).
My personal strategy (to be adapted according to your objectives)
- If you want growth → Favor a S&P 500 ETF
- If you want high dividends → Opt for a High Dividend ETF (e.g.: HDV).
- If you want passive real estate → One Global REIT ETF It might be an option, but not a priority.
💡 An alternative to passive real estate investments : THE European multi-sector SCPIs (Real Estate Investment Trusts) also offer a passive real estate income diversified, without active management.
FAQ: REIT: Investing in Passive Real Estate
What is a REIT and how does it work?
A REIT (Real Estate Investment Trust) is a publicly traded company specializing in rental real estate investment, such as offices, shopping centers, or residential properties. Unlike direct real estate investment, REITs allow investors to buy shares through the stock market, like a regular stock. Their distinguishing feature? They are required to redistribute at least 90% of their profits in the form of dividends, making it a popular tool for generating a regular passive income.
What are the advantages of investing in REITs?
Investing in REITs offers several major advantages. First, the liquidity Unlike real estate, you can buy or sell your shares at any time, like a stock. Then, the diversification is simplified, as a single REIT can own hundreds of properties in different sectors (residential, commercial, industrial) and regions. REITs also offer attractive returns, thanks to their regular dividends.
What are the risks associated with REITs?
Like any investment, REITs carry risks that must be fully understood. They are interest rate sensitive When interest rates rise, the cost of financing REITs increases, which can weigh on their performance. Their value is also subject to the stock market volatility, even if their underlying asset (real estate) is generally more stable. Another risk lies in their dependence on the local real estate market A sector-specific crisis (e.g., post-COVID office vacancies) can impact their revenues. Finally, the dividends paid are taxable. It is therefore essential to thoroughly analyze the sector, the quality of the assets and the financial health of the REIT before investing.
How to choose the best REITs for your portfolio?
Favor REITs that own well-located properties with creditworthy tenants and long-term leases. geographical and sectoral diversification is a plus for limiting risks. If you prefer an even more passive and diversified approach, the ETF REITs (like the VNQ for the United States) or a Global REIT ETF (RETF ETF) allow you to invest in a basket of REIT stocks in a single transaction.
REITs vs. direct real estate: which is the best option?
The choice between REITs and direct real estate investment depends on your goals and investor profile. REITs are perfect if you're looking for liquidity, simplicity and diversification No rental management, no maintenance fees, and the ability to sell your shares quickly. They are also accessible with modest capital, unlike buying real estate. On the other hand, direct real estate offers a total control on your investment. If your goal is to generate a passive income without constraints, REITs are often the most suitable solution. For a hybrid strategy, you can combine the two: invest in REITs for liquidity and keep a rental property for control and stability.
REIT: Investing in Passive Real Estate
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REIT: Investing in Passive Real Estate
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