Initial Capital Outlay Investing in a physical property would require a large downpayment. Especially with cooling measures; additional buyer's stamp duty (ABSD) and total debt (TDSR). Many invests in a physical property under the assumption that the property value will soar over the next few years and that rental collected will be sufficient to offset mortgage. The downpayment for a property is at least 20%, which can amount to more than $10,000 for a condo! Whereas, REITs investment require a much smaller amount. Leverage Previously, one could easily utilize his/her CPF Ordinary Account to pay the downpayment and mortgage rates are low (approx 1.7%) however, with the current cooling measures, it is no longer as easy to get as much leverage. For REITs, due to high interest rates, brokers charge 2.5 to 3.5 times the value of the stock. Liquidity Physical properties are one of the most illiquid assets, as it may take months to years to sell, depending on the market condition. On the other hand, REITs can be bought and sold easily. Income Tax In terms of profitability, rental income on physical properties are subjected to income tax while REITs are tax free! If you're looking to diversify your portfolio, REITs offer the opportunity to own overseas asset as investments in physical properties are usually done locally. If you're looking to grow your portfolio, REITs is a cheaper method as you would not have to pay the large downpayment and ABSD.