Comparison of REIT and BIST 100 Index Performances Using the Sharpe Ratio under High Inflation Periods

Abstract

Purpose – This research compares the performance of real estate investment trusts (REITs), which are among the key real estate capital market instruments in Türkiye with the BIST (Borsa Istanbul) 100 index and aims to shed light on the decision-making processes of domestic and foreign individual and institutional investors regarding long-term investments in our country through the real estate capital markets.
Design/methodology/approach – The research covers four different time periods separately: (2020-2024), (2021-2024), (2022-2024), and (2023-2024). Risk-return performance analyses are conducted using the Sharpe Ratio based on the monthly time series. Since the study includes a period of high inflation, the announced Consumer Price Index (CPI) is also used as a benchmark for comparison.
Results – The analyses indicate that the REIT index outperformed the BIST 100 index in all examined time periods. However, both indices performed below the CPI in the extremely high inflation environment.
Discussion – This study is the first to compare the performance of REITs and the BIST 100 index against the CPI using the Sharpe Ratio during the high-inflation period that started with the COVID-19 era. It contributes to the Turkish capital markets and provides policy recommendations to enhance the depth of the real estate capital markets.