I think that the REIT structure will suit a lot of people that are investing in property. They will particularly appeal to those that do not have inflated expectations on what type of returns that can be achieved, either by capital growth or yield.
This is not the say that they are a property investment panacea but, rather, that they fill a gap in the market as part of a property portfolio.
A ‘collective’ investment in REITs would give you access (which might have been unavailable to individual investors) to property in a number of sectors (residential, office, shopping centres etc) with a large geographical spread. The outlay is comparatively low and you can exit a lot easier than a direct investment. Syndicated or Direct investment in property is not regulated by the Financial Regulator, a ‘collective’(wrapped) investment would be.
They will probably be more suitable for income seeking investors that can invest for the long term and gain comfort from things like corporate governance, diversification, and restrictions on debt-financing, gearing and development.