Residential investment property or real estate investment

Residential investment property 2011 or real estate investment trusts? Australian investors are generally passionate about property as an investment. Most investors have focused on residential property, but what about real estate investment trusts? What are real estate investment trusts? A real estate investment trust (REIT) or listed property trust (LPT) is a collective investment vehicle that owns a portfolio of property. REITs are quoted on the Australian Securities Exchange (ASX), which allows you to purchase an interest in a professionally managed portfolio of commercial real estate. Real estate investment trust managers invest in properties across a range of geographic regions, with varying lease lengths and tenant types. As at 31 December 2010 there were 43 REITs listed on the ASX,

1 with a combined market capitalisation of over $62 billion . Advantages of real estate investment trusts While history has shown that property has proven to be a good investment, residential property is only one way to access the property sector. There are a number of advantages of REITs over traditional residential property investments including: ▪ Diversification . We all know the phrase ‘don’t put all your ▪ Expertise. REITs are managed by property professionals. eggs in one basket’. The same principle applies to property They are skilled at determining which properties offer the most investment. There is a significantly higher chance of an value, both in terms of capital growth and income, negotiating isolated event changing the value of a residential investment on price, development, tenanting and ongoing maintenance. property. With an investment in REITs the risk is spread across While the key to investing in property is buying well, further a number of properties. Also REITs generally invest across a value can be added through successful management. number of property sectors such as office, retail and hotels ▪ Higher yields. The average rental yield for a median residential – not just residential property. Given that these sectors do 1 property in Sydney over the 12 months to September 2010 not perform the same way at the same time, you get further was 3.3% (and that’s before any expenses were taken out). diversification. Some REITs also have exposure to international This compares with the income yield from REITs which was property, providing yet another level of diversification. 5.7% over the same period. ▪ Liquidity . In the future you may need to sell your investment. ▪ No need to borrow. With the Sydney moving annual median While selling a residential property can take some time – finding 2 house price close to $618,600 , investing in residential property an agent, advertising, negotiating the sale and settlement – the demands a significant capital investment and in most cases sale process with REITs is significantly faster. REITs are listed on a large amount of debt. In comparison, the minimum capital the ASX, so selling an investment is as easy as placing an order investment required to gain exposure to the property market with a stockbroker. Also, instead of selling your entire investment, through REITs with Perpetual’s WealthFocus platform is $2,000 you can choose how much you liquidate. or $1,000 with a...

Website: www.perpetual.com.au | Filesize: 220kb
No of Page(s): 2
Download Residential investment property or real estate investment ... - Perpetual.pdf