An REIT is a stock. It is just a stock in a special kind of company. By law, and REIT must return 90% of its profits to the shareholders. It has some other rules pertaining to it, and it gets special tax benefits, but it is a company, and should be thought of like any other stock.
You are also right to worry about what high property values are doing to these stock prices. I also want to own REIT units and did some light investigation into RioCan (one of the largest REITs in Canada). Their stock has gone up considerably since 2008, far more than most, and it is still climbing. They pay out well (twice what my dividened specific ETFs do). But, like you, I’m worried that a lot of their value is based on the land value of properties in the big Canadian cities where property values have been increasing (much) faster than wages for more than a decade. RioCan also only invests in retail and office properties. That means that if the retail sector is hit hard, or fundamentally changes due to more online shopping, or just a lot of big walmarts opening up near a riocan properties, the shareholders will feel it.
Personally, I’d be much more comfortable with an REIT that invested in apartment complexes (people won’t have to shop at the local strip mall, but they will have to live someplace).
Vanguard Canada has an REIT index fund. What this means is that it holds a whole bunch of different REITs. Right now, this would be my choice. You get to invest in REITs without tying yourself to the success/failure of a single one (but if the property markets in Toronto and Vancouver drop, you’ll still feel it, since all the REITs will be affected). Under Canadian law, a fund cannot publish its returns until it has been running for a year. Unfortunately, Vanguard is brand new to Canada, so we can’t see the payouts on this fund yet.
TL;DR version: You are right to worry about the property costs in Canada, and I agree an adjustment is coming; when it does REITs will go down in value. If you are going to go the REIT route, and want to avoid risk, I’d go with the Vanguard REIT fund. I would not sink all of your money into that fund however. I would put more of it into another broad index fund (Vanguard has plenty to choose from, as do some of the big banks now, TD and Bank of Montreal specifically).