S&P Dow Jones Indices and MSCI have recognised real estate as an asset class.

The two companies said the decision had been made as part of an annual review of their Global Industry Classification Standard (GICS) structure.

The change, scheduled for 2016, will see real estate elevated from its current Financials Sector classification.

The Real Estate Investment Trusts Industry will be renamed Equity Real Estate Investment Trusts (REITs) and excludes Mortgage REITs, which remain in the Financials Sector under a newly created industry and sub-industry called Mortgage REITs.

Remy Briand, managing director and global head of equity research at MSCI, said: “Feedback from the annual GICS structural review confirmed real estate is now viewed as a distinct asset class and is increasingly being incorporated separately into the strategic asset allocation of asset owners.

“Investors told us there are significant differences between public real estate and financial companies, and, therefore, real estate deserves a dedicated GICS sector.”

S&P and MSCI said they planned to implement the changes to the GICS structure after market close on 31 August 2016.

However, the companies requested feedback from market participants by 13 February next year.

A final decision on the date of implementation will be announced by 13 March 2015.

Real Estate is being moved out from under the Financials Sector and being promoted to its own Sector under the code 60.