In finance, volatility is simply the a measure for variation of price of a particular security or asset. In the context of REITs investments, volatility will refer to how much the price of a property fluctuates between record highs and record lows within a particular set of time.
In general, REITs are relatively stable in comparison to other securities such as stocks and commodities. However within the realm of REITs, prices of properties with long term leases are generally more stable than prices of properties that largely depend on long term leases. For example the REITs of hotels and offices are seen as volatile as the prices of these properties will fluctuate considerably between times of economic slowdowns when demand from tourists and businesses are low, and times of economic booms when there is a demand for rooms and office floor space. In contrast REITs with long term leases, such as hospital REITs and mall REITs, are seen to be less volatile.
Volatility as a metric is denoted by the symbol σ and is sometimes referred to as standard deviation. There is no consensus as to the threshold at which a REIT is considered to be volatile. But REITs beyond volatility values of two standard deviations over a particular period of time is largely considered to be volatile.
It is not possible to advise for or against buying a REIT with a high volatility. A REIT with a high volatility would mean a higher possibility of shortfall should the REIT holding needs to be liquidated. However REITs with high volatility would also mean that there are ample opportunities for the astute investor to buy in, especially as it reaches the record lows. As with all investments, it will be prudent to read volatility in the context of other factors such as yield.