As many researchers have pointed out, there has been an explosive growth of the REIT market.
For example the market capitalisation of the industry has gone from $1.88 billion in 1972 to $44.31 billion in 1994 for the total index with a substaintial amount of that growth in the equity index (without healthcare).
Neverthless there are disadvantages to investing in property shares.
Firstly, the prices of property shares move up and down with the stock market, as such they are more voliatilie.
Furthermore another advantage with indirect investment vehicles is the opportunity for the investor to capitalise on discounts and premiums, especially in the case of close-ended funds.
The net asset value of investment company’s share keep going up and down based on company’s performance and these shares are not always traded on net asset value.
However, in common with property company shares, REITs exhibit higher volatility than the direct market.
The advantages of investing in Property Unit Trusts and Managed Funds is that they offer relatively low unit costs , allowing investors to acquire an interest in a diversified property portfolio without excessive commitment of capital.
Another disadvantage is the charges involved in buying into property shares, trusts and funds.
Investment companies do not provide the high quality portfolio management services for free.