Australia’s property market is a national obsession, but for investors looking to diversify beyond direct ownership or the volatility of listed property trusts, non-traded Real Estate Investment Trusts (REITs) are commanding fresh attention. As regulatory shifts and market dynamics reshape the landscape in 2025, understanding the nuances of non-traded REITs is more important than ever.
What Are Non-Traded REITs, and How Do They Work?
Non-traded REITs pool investor money to buy and manage income-producing commercial properties, such as shopping centres, office buildings, healthcare facilities, or logistics warehouses. Unlike their listed counterparts, non-traded REITs are not bought or sold on public stock exchanges. Instead, investors purchase units directly from the issuer—often via financial advisers or managed investment platforms.
- Illiquidity: Units are typically locked in for five to seven years, or until the REIT’s assets are sold or listed.
- Valuation: Unit prices are based on periodic property appraisals, not daily market swings.
- Income Focus: Most non-traded REITs distribute regular income, often quarterly, drawn from rent and property gains.
For Australians seeking steady cash flow and property exposure minus the share market’s daily drama, non-traded REITs offer a compelling alternative.
Why Non-Traded REITs Are Gaining Traction in 2025
Several 2025 trends are fuelling renewed interest in non-traded REITs:
- APRA’s Revised Liquidity Guidelines: In response to 2023’s market volatility, APRA has raised the bar for liquidity management in managed investment schemes, leading many fund managers to favour non-traded, closed-end structures that can better weather redemption waves.
- Tax Efficiency: The 2024-25 Federal Budget reinforced the concessional tax treatment for managed investment trusts (MITs), including non-traded REITs, making them attractive for SMSFs and high-income investors.
- Commercial Property Repricing: As the commercial property sector digests higher interest rates and changing work patterns, non-traded REITs have been able to selectively acquire assets at discounted valuations, aiming to lock in higher yields for the next cycle.
For example, in early 2025, Centuria’s unlisted Healthcare Property Fund secured a portfolio of medical centres at a 12% discount to 2022 valuations, passing on attractive initial yields to new investors.
The Pros and Cons: Is a Non-Traded REIT Right for You?
While non-traded REITs can offer stability and income, they’re not for everyone. Here’s a balanced look:
- Pros:
- Diversification across multiple properties and tenants
- Generally higher, more stable income yields than listed REITs in volatile periods
- Lower correlation with sharemarket movements
- Cons:
- Liquidity risk—capital is tied up until the fund winds up or assets are sold
- Valuations are updated less frequently, making it harder to gauge true market value
- Higher upfront fees and ongoing management costs compared to ETFs or listed REITs
In 2025, ASIC has increased disclosure requirements for non-traded REITs, mandating clearer communication of liquidity risks and fee structures in product disclosure statements (PDS). This move is designed to ensure investors understand the commitment and risks involved before diving in.
Key Considerations Before Investing
If you’re evaluating non-traded REITs for your portfolio, consider these tips:
- Check the experience and track record of the fund manager—past performance is no guarantee, but it’s a guide.
- Review the property mix: are assets diversified across sectors and geographies, or concentrated in a single niche?
- Understand liquidity terms and exit options—some funds offer periodic liquidity windows, others do not.
- Scrutinise the fee structure, including entry and exit fees, management fees, and performance incentives.
- Read the latest PDS and annual reports, and pay attention to how the REIT has navigated recent market shocks.
Conclusion
Non-traded REITs are emerging as a resilient, income-generating option for Australian investors in 2025’s shifting property landscape. While they’re not as accessible as shares or ETFs, their ability to deliver stable returns and diversify away from market volatility makes them worth a closer look—especially for those with a medium- to long-term horizon.
