For a very long time now real estate investment trusts have been one of the most useful tools in the arsenal of a property investor. A real estate investment trust is a corporation investing in property around the world that is not subjected to corporate income taxes or at the very least is subjected to dramatically reduced rates of corporate taxation in the countries that they operate. The caveat on this lowered taxation however is that real estate investment trusts are required to distribute 90% of their income to investors (and therefore make that income taxable to the investors that receive it).
The REIT is to a real estate or property investor what a mutual fund is to a stock investor, and there are indications that 2008 is going to be a very good year to get involved with REITs around the world.
One good reason to start working with REITs in the New Year is that most REITs are looking forward to projections that have them doing very well in the upcoming year. Take Axis REIT for example. They are a company operating out of the typical REIT model that has diversified into acquisitions from third party property brokers as well as private equity projects. They have consistently provided good returns to their members and have provided many people with a positive first introduction to the world of property investment.
While some property markets are floundering in the West in 2008, many in the East are exploding and REITs are well placed to take advantage of this through the leveraging of capital provided by multiple individual property investors.
Another reason for the optimism is the expansion of REIT models into markets that have not previously had them. A perfect example of this is the country of India which has moved forward to introduce legislation that would effectively allow REIT operations into the country in full for the first time in 2008. With this recent move, India joins nearby growing real estate markets like Hong Kong, Japan and Singapore in allowing REIT operations.
The future is looking bright for REIT firms around the world, meaning that now might be the time to take a closer look at REIT companies operating in hotspot property markets.
