One of the investors wants to invest in the growing real estate market. The entry and exit from the physical real estate is not cost effective and illiquid. Is there any way to invest in real estate like other securities
CS Executive · Capital Market and Securities Laws · PYQS · June 2024
One of the investors wants to invest in the growing real estate market. The entry and exit from the physical real estate is not cost effective and illiquid. Is there any way to invest in real estate like other securities? State briefly.
Answer & Explanation:
A Real Estate Investment Trust ("REIT") is a collective investment scheme that owns, operates or finances income producing real estate. REITs provide all investors the chance to own valuable real estate, present the opportunity to access dividend-based income and total returns, and help communities grow, thrive, and revitalize. REITs allow anyone to invest in portfolios of real estate assets the same way they invest in other industries through the purchase of individual company stock or through a mutual fund or exchange traded fund (ETF). The stockholders of a REIT earn a share of the income produced through real estate investment without buying any finance property. Benefits of REITs include: Less Capital Intensive: Direct investment in real estate property is very capital intensive. But each shares of REITs will be comparatively more affordable (it will not require large capital outflows). Suitable for small Investors: Investing through REITs will eliminate dealing with builders, thereby avoiding potential exposure to big builders. Transparency: REITs stocks are listed in stock market, hence details will be available on public domain. Assured Dividends: REITs generates income in form of dividend. REITs dividend payment is relatively assured as most of their income is in the form of rental (lease) income. Tax Free: Dividend earned by the investors of REIT will be tax free. Fast Capital Appreciation: Capital appreciation can be phenomenal. Easy to buy: Investment in REITS is easier than investment in Real Estate properties. REITs are similar to mutual funds and shares and they provide income by way of dividend to its shareholders and capital appreciation as REITs stocks are listed on stock exchanges.
Topics: Investment Avenues
Related Questions in this Topic
- Growmore Mutual Fund is doing well in the capital market. However, one of its senior directors suggested that despite th...
- Star Limited, is a listed company with Innovators Growth Platform. In the recent past, it has made its initial public of...
- N, a newly appointed director of Newage Electronics Limited, a listed company with the National Stock Exchange. In his f...
- Write short notes on the following: (e) Periodic and continual disclosure as general obligation of Collective Investment...
- Write short notes on the following: (d) Disqualification from being appointed as Mutual Fund Trustees