Real Estate’s Debut as Standalone Sector Has Positive Impacts

McNearney says it is far easier to ascertain the quality of the underlying REIT assets.

HOUSTON—Real estate’s debut as a standalone sector within the Global Industry Classification Standard is good news for the industry, both as a recognition of growth during the past quarter century and as a harbinger of investment dollars. The new category is expected to funnel $100 billion into the sector as investors diversify portfolios by adding or increasing real estate exposure, according to Transwestern.

A new designation within the GICS treats public real estate companies and REITs as distinct from the financials sector, which also includes banks, diversified financials and insurance. The new 11th sector encompasses equity REITs along with real estate management and development companies, under the code 60, allowing for more seamless global comparisons for this type of investment. Sector 11 is the ninth largest out of the GICS categories and similar in size to the utilities sector.