US REITs Return 7.08% Annually, Beating Europe's 1.23% Over Decade

US-focused real-estate investment trusts have delivered more than five times the annualized return of their European peers over the past decade, a gap reshaping how investors allocate to the sector.

US-focused real-estate investment trusts averaged a 7.08 percent annualized return over the 10 years through 2025, versus 2.33 percent for Asia-focused REITs and just 1.23 percent for those concentrated in Europe, according to Morningstar Direct data analyzed by researchers at George Mason University.

The findings come from a study by Derek Horstmeyer, professor of finance and director of the Future of Finance Lab at George Mason's Costello College of Business, who pulled return data on all REIT mutual funds and exchange-traded funds going back to the mid-1980s. "US-focused REITs have done best, led by data-center REITs," Horstmeyer wrote in the report.

Within the US, data-center REITs delivered the strongest performance, averaging a 13.75 percent annualized return over the past decade with 21.36 percent volatility. Commercial real-estate trusts followed at 10.18 percent, infrastructure-focused REITs — spanning cellphone towers and pipelines — returned 9.51 percent, and residential REITs lagged at 7.05 percent. The artificial-intelligence boom has lifted data-center returns, though those trusts were outperforming peers even before 2023, the study found.

The regional gap is stark on a risk-adjusted basis. European REITs posted the worst returns with the highest volatility at 23.56 percent, while US trusts delivered 7.08 percent with 18.25 percent volatility. Asia-focused REITs returned 2.33 percent with the lowest volatility at 15.10 percent.

The divergence carries direct implications for capital allocation. A $10,000 investment in US-focused REITs a decade ago would have grown to roughly $19,800, versus about $11,300 for the same sum in European REITs, based on the annualized figures. For income-focused investors, the sector's appeal rests on distributions — REITs must pay out at least 90 percent of taxable income — making total-return differences of this magnitude decisive over a full market cycle.

The data also shows the sector's operational momentum. GEO Group, a Florida-based REIT that owns and operates secure facilities, reported second-quarter revenue of $732.1 million, up 15 percent from a year earlier, and raised its full-year adjusted EBITDA guidance to a range of $550 million to $560 million. The company repurchased about 1.6 million shares during the quarter at a cost of $36.6 million.

For investors weighing REIT exposure, the research points to a clear hierarchy: US data-center and commercial trusts have historically rewarded risk-taking, while European REITs have combined meager returns with elevated volatility. With the AI buildout continuing to drive demand for data-center capacity, that leadership appears likely to persist, though elevated volatility in the best-performing segment warrants caution.

This article is for informational purposes only and does not constitute investment advice.