How to Invest in REITs in Australia (and Whether You Should)
How to actually invest in REITs in Australia: individual A-REITs vs REIT ETFs like VAP and DJRE, the honest pros and cons, the tax traps, and who they suit.
By Timothy Hirou GaschereauPublished 13 min read
Try it yourself
A REIT (Real Estate Investment Trust) lets you own a slice of income-producing commercial property, shopping centres, office towers, warehouses, logistics hubs, through the ASX, with the rent passed through to you as regular distributions. No deposit, no tenants, no 11pm maintenance calls.
For the full explainer on what a REIT is and how the structure works, see our what is a REIT guide. This is the practical follow-up: how to actually invest in REITs in Australia, the honest case for and against, how they are taxed, and who they genuinely suit. General information only, not financial advice.
🎯 The essential: You invest in REITs through any ASX broker, either individual A-REITs (like Goodman GMG or Scentre SCG) or, more sensibly for most people, a REIT ETF (VAP or SLF for Australian property, DJRE for global). The catch nobody mentions: REITs trade like shares, not property, so they fall in market crashes, they are very interest-rate sensitive (2022 was brutal), and their distributions are mostly unfranked with complex tax. And if you already hold VAS, you already own the big A-REITs, so a REIT ETF concentrates, it does not diversify.
The two ways to invest in REITs
Two routes, same brokerage account: buy individual A-REITs, or buy a REIT ETF. The difference is how concentrated you end up.
| Individual A-REIT | What it owns |
|---|---|
| Goodman Group (GMG) | Industrial, logistics, data centres |
| Scentre Group (SCG) | Westfield shopping centres (AU and NZ) |
| Stockland (SGP) | Residential communities, retail, logistics |
| GPT / Dexus / Charter Hall | Office, retail and industrial property |
Buying a single A-REIT concentrates your risk in one company and sector. Not a recommendation, do your own research. One thing to know: Goodman (GMG) dominates the A-REIT index, so even an index ETF carries heavy industrial and logistics exposure.
REIT ETFs: one trade, instant spread
For most investors, a REIT ETF is the more sensible starting point. The main ASX options:
| ETF | Tracks | MER | Focus |
|---|---|---|---|
| VAP (Vanguard) | S&P/ASX 300 A-REIT | ~0.23% | Australia only |
| SLF (SPDR) | S&P/ASX 200 A-REIT | ~0.16% | Australia only |
| MVA (VanEck) | MVIS Australia A-REITs | ~0.35% | Australia only |
| DJRE (SPDR) | Dow Jones Global Real Estate | ~0.20% | Global (US, EU, Asia, AU) |
Australian vs global property
VAP, SLF and MVA are Australia-only, and in practice heavily concentrated (Goodman, Scentre and Stockland dominate all three). DJRE is the global option, adding US REITs (data centres, healthcare, residential apartments, sectors that barely exist here) plus European and Asian property, for genuine diversification. The trade-off: DJRE is unhedged, so you take on currency risk. Neither is objectively better; it depends on whether you want Australia-focused or a broader global slice.
The case for REITs
- Property exposure without the deposit. No $800,000 and a mortgage to own a slice of a Westfield or a logistics hub.
- Liquidity. Sell on the ASX any trading day. Try that with a house.
- No landlord headaches. No tenants, no maintenance calls, no agent taking a cut.
- Regular income and instant diversification across many properties, from a single low-cost entry.
The honest case against (the risks)
The section most people skip. Do not.
- REITs trade like shares, not property. The single biggest misconception. When the sharemarket falls, REITs fall with it, tracking investor sentiment and rates, not the physical property market. If you buy them because they feel “safe like property”, you have misunderstood the product.
- Interest-rate sensitivity. REITs carry debt, and their yield competes with bonds and savings. When rates rose in 2022, A-REITs were hit hard; when rates fell in 2020, they soared.
- Gearing amplifies everything. REITs borrow to buy property, and you do not control the gearing level.
- Mostly unfranked distributions with complex tax (ordinary income, tax-deferred amounts, capital gains), see below.
- Concentration and not residential. Goodman alone is a huge chunk of the index, and A-REITs are commercial property, not the Sydney or Melbourne housing market.
You might already own REITs
Here is what a lot of investors miss: if you hold a broad ASX ETF like VAS or A200, you already own the major A-REITs. Goodman, Scentre, Stockland and GPT are all in the ASX 300.
Buy VAP on top of VAS and you are not diversifying, you are doubling down on property (more GMG, more SCG). This is one of the most common portfolio mistakes. If you are happy with the property weighting VAS already gives you, you probably do not need a dedicated REIT ETF. If you want more, add one as a deliberate tilt, not a default.
REITs vs buying an investment property
Often framed as either/or. Here is the honest comparison.
Direct property gives you leverage you control, negative gearing and depreciation deductions, none of which REITs replicate. REITs give you liquidity, a low entry point and a completely passive holding. Different tools for different goals.
The tax treatment (the bit most people skip)
Most investors look at the distribution yield and stop. That is a mistake. Most A-REIT distributions are unfranked (no franking credits to offset your tax), and they often have several components on your annual tax statement: ordinary income (taxed at your marginal rate), tax-deferred amounts (not taxed now, but they reduce your cost base, creating a larger capital gain when you sell), and capital gains components. Keep every annual statement, and if you hold REITs in a taxable account, an accountant is genuinely worth the cost. See how investment income is taxed for the wider picture.
Who REITs suit
A good fit if you want property exposure without the capital, debt or hassle; are an income investor who understands the tax complexity; want to deliberately tilt toward property beyond what VAS gives you; and understand REITs behave like shares.
Probably not for you if you already hold VAS and think a REIT ETF will diversify you (it concentrates you); think REITs are safe like property; are a high earner wanting franking credits (most REIT income is unfranked); or want residential property exposure.
Common mistakes with REITs
- Thinking REITs are safe like property. They trade on the ASX and fall in crashes, sometimes harder than the index.
- Doubling up with a broad ETF. If you hold VAS, you already own A-REITs. VAP on top concentrates, not diversifies.
- Chasing yield. A high distribution yield can just mean the unit price has fallen. High yield can be a warning, not a reward.
- Ignoring rate sensitivity. REITs and rates move inversely. Factor it in, especially when rates are on the move.
- Not understanding the tax components. REIT distributions are not simple dividends. Read the tax statement, and ask an accountant if unsure.
❓ Frequently asked questions
Are REITs a good investment in Australia?
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It depends on your goals. REITs offer property exposure, liquidity and regular income, but they trade like shares, are sensitive to interest rates, and have complex tax treatment. They suit investors who understand those trade-offs and are making a deliberate choice, not those who think they are getting something safe like property.
What is the best REIT ETF in Australia?
+
VAP (Vanguard Australian Property Securities) is the most popular for Australian property, at about 0.23%. DJRE suits investors who want global property across the US, Europe and Asia. The best one depends on whether you want Australia-only or global exposure, and whether you are comfortable with currency risk.
Do REITs pay dividends?
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A-REITs pay distributions rather than traditional dividends. These are mostly unfranked and can include ordinary income, tax-deferred amounts and capital gains components. Check your annual tax statement carefully, and consider speaking to an accountant.
Can I hold REITs in my super?
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Yes. You can hold REIT ETFs in an SMSF, and some industry and retail super funds offer listed-property options. The tax treatment inside super differs from a personal taxable account, so factor that in.
Are REITs affected by interest rates?
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Yes, significantly. When rates rise, REIT prices typically fall, because their debt costs more and their distributions look less attractive against bonds and savings. The 2022 rate-hiking cycle was a difficult period for A-REITs. It is one of the most important dynamics to understand before investing.
If I already own VAS, do I need a REIT ETF?
+
Probably not, unless you want more property exposure than VAS already gives you. VAS holds the major A-REITs as part of the ASX 300, so adding a dedicated REIT ETF concentrates your portfolio in property rather than diversifying it. Make it a deliberate decision, not a default.
Keep reading
📚 Recommended reading
The Barefoot Investor
Scott Pape
The Barefoot Investor
Scott Pape
Australia's best-selling money book ever. A simple system for accounts, budgeting, debt and a real emergency fund in one.
The Armchair Guide to Property Investing
Ben Kingsley & Bryce Holdaway
The Armchair Guide to Property Investing
Ben Kingsley & Bryce Holdaway
Two of Australia's most trusted property voices lay out a plain-English roadmap to building a portfolio on an average income. Practical, local, and refreshingly free of get-rich-quick hype.
Girls That Invest
Simran Kaur
Girls That Invest
Simran Kaur
A no-jargon crash course from the podcaster behind Girls That Invest that makes the sharemarket feel doable, written especially for women starting out. The perfect first step before you buy your first ETF.
Some links above are affiliate links. If you buy through them, Snowball Invest may earn a small commission at no extra cost to you. We only recommend books we'd suggest anyway.
Sources
This article is general information only, not financial or tax advice. It does not take your circumstances into account. REIT fees, holdings, distributions and tax rules change, and figures here are indicative as of mid-2026. Verify current data with the fund provider, check the ATO, and consider a licensed adviser or accountant before investing. Past performance is not a reliable indicator of future performance.
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General information only. This article is educational and does not constitute personal financial advice. It does not account for your circumstances. Consider your own situation and seek advice from a licensed adviser before acting. Read our full disclaimer.
Timothy Hirou Gaschereau
Founder of Snowball Invest, not a financial adviser.
I write about what I'm learning myself, because nobody ever taught us how to take control of our own money. It's a skill, not a mystery, and it's never too late to learn it. The best day to start was yesterday, the second best is today.
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