Stake Real Estate vs REIT - What Is The Difference?

In this blog, we’re comparing Stake real estate vs REIT to help you better understand how each works. We are often asked to explain the difference between Stake and a Real Estate Investment Trust (REIT).

Understanding the differences is essential when choosing the best investment plan but knowing which investment is best can get confusing.

Whether it’s fractional ownership of properties in the UAE or private real estate funds in KSA, what Stake offers investors differs from a REIT in several ways.

In this blog, we’ll deep dive into this topic, looking at REITs, how it compares to Stake and other info to help you make an informed decision.

But first, let’s define what each product is:

What is REIT investing?

A Real Estate Investment Trust (REIT) is essentially a real estate fund or a Collective Investment Scheme. A REIT could best be described as a vehicle designed to invest in one or more properties. Investors can purchase units in the REIT to gain exposure to the REIT’s portfolio of assets.

Most commonly, REITs:

A) Own multiple assets (let’s call this a “Diversified REIT”), often following a specific strategy to invest in categories like residential, commercial, retail, healthcare, logistics assets, or mortgage loans.

B) Are listed on a stock exchange (referred to as a “Public REIT”).

According to REIT.com there are approximately 940 listed Public REITs worldwide, with a combined market capitalization of USD 2 trillion.

Additionally, REITs are typically formed to create passive income, which real estate tends to lend itself to well, being a productive asset that generates cash flows from renting out the physical space it owns.

The REIT has several parties involved:

• The REIT (Fund) Manager/Sponsor: The entity that establishes and manages the REIT’s structure and strategy. Often, the sponsor seeds the REIT with its own capital or privately raised funds. The Manager is a financial institution regulated by a capital markets authority and handles day-to-day operations.
• The Board of Directors: A group of individuals who govern the REIT and represent the interests of shareholders.
• The Property Management Company: The party responsible for tenant relations, leasing, maintenance, and upkeep of the REIT’s properties.
• The Auditor: An accounting firm in charge of conducting regular financial audits to ensure compliance with accounting standards and regulations.
• The Valuer: A certified firm (e.g., RICS-certified or licensed by TAQEEM in KSA) responsible for appraising the value of REIT assets.
• The Investors: people who purchase shares in the REIT and are seeking REIT investment returns.

Note: Occasionally you may come across REITs that are invested in only one asset (a ”Single Asset REIT”) and that are not publicly listed on a stock exchange. These are privately owned (a ”Private REIT”). However, they are far less common compared to Diversified Public REITs.

Lastly, REITs are forms of securities, typically issued and managed by financial institutions that are licensed and regulated by capital markets authorities. In the US, this is the Securities and Exchange Commission (SEC). In Saudi Arabia, it is the Capital Market Authority (CMA).

What is Stake?

Stake is one of the leading real estate investment platforms in the world, available to anyone anywhere in the world and offering investments to curated properties in the UAE and KSA markets. Our mission is to empower everyone to own and build weath passively through real estate

As of today, Stake offers easy access to two products:

1. Why regulation matters for your investments: Stake Fractional Ownership: In the UAE, Stake operates a platform regulated by the DFSA, allowing investors to fractionally own properties like apartments or villas through a Special Purpose Vehicle(SPV) an entity located in the Dubai International Financial Center (DIFC) formed for the sole purpose of acquiring a single property. Individual investors purchase a stake in the property by becoming a shareholder in the SPV that owns the title deed to the property. 
2. Stake Funds: In KSA, Stake offers private real estate funds regulated by the CMA. These single-asset funds allow investors to create their own portfolios by purchasing units in one or more funds. 

Why regulation matters for your investments: Regulation ensures that Stake operates transparently and securely, providing a trustworthy platform for investors. Being regulated by authorities like the DFSA and CMA means Stake adheres to stringent financial and operational standards, ensuring the safety of your investments. It also provides oversight, reducing risks of fraud and mismanagement, and offers investors confidence that their interests are protected. This regulatory compliance reflects Stake’s commitment to maintaining the highest standards of integrity and professionalism in the real estate investment market.

There are 3 things to note when comparing a property on Stake vs a REIT:

1) Exposure to volatility

As they are publicly listed, REITs experience price movements tied to stock market volatility. These swings are driven by factors like investor sentiment, macroeconomic trends (e.g., interest rate changes), political developments, and broader economic conditions. In financial jargon, this is called ‘beta’. This means that REIT share prices are subject to fluctuations unrelated to the actual value of the underlying real estate assets.

Additionally, REITs are exposed to liquidity risk: the possibility that you might struggle to find buyers for your shares when you want to sell, or sellers when you want to buy. This is why the share price of a REIT can often move far away from its Net Asset Value (NAV), as it’s driven by the Valuer (who conducts the periodic asset appraisals on the REIT portfolio) and Auditor of the REIT (who carries out the NAV calculation).

When it comes to real estate vs. REIT, several differences make Stake Funds  a better investment. Stake Funds are private investments (not publicly traded) and typically own a single property. This structure means you’re insulated from stock market volatility. Your exposure is limited to the specific property you choose to invest in. Stake gives you transparency over key details such as the property’s location, developer, tenant profile, and even ownership documents like title deeds. With features like 3D tours, you have everything needed to make an informed investment decision. As an investor, you essentially become a landlord, focusing solely on the property’s performance and NAV, which is recalculated every six months. There’s no correlation to external stock market factors—just a direct connection to the real estate asset.

2) Power of selection

In a REIT, the fund manager has a discretionary right to buy and sell underlying properties to create real estate REIT investing returns and build diversification. So you as an investor are in the back seat, with limited control of asset selection and portfolio composition. This is what is called a wide discretionary mandate.

With Stake Funds, you choose which single-asset fund to invest in, giving you full control over your portfolio’s composition and diversification strategy. The fund manager's role is narrowly focused on property management oversight and dividend distribution, ensuring you stay in the driver’s seat.

3) Frequency of distributions

While REITs typically pay dividends quarterly or semi-annually, Stake Funds (when income-generating) distribute dividends monthly, providing more frequent returns on your investment.

Comparing Investment Options: Public REITs, Private REITs, and Stake

In the following table, you will see a detailed comparison of public REITs, private REITs, and Stake’s offerings, including fractional investments and private funds, across key factors such as ease of access, capital requirements, transparency, and more.

Ready to start building your real estate portfolio? Explore Stake's funds and unlock premium real investment opportunities in the KSA and UAE.