Offshore Opportunities for A-REITs

Are you looking for an ideal real estate investment opportunity? If so, an Australian real estate investment trust (A-REITs) may present a profitable option.

A REIT is simply defined as a trust that purchases income property, either residential or commercial, using funds from pooled from all investors. Some REITs also manage real estate or mortgages.

The advantages of investing in a REIT are several. For one, you become part owner of the property, but it can be quickly liquidated as necessary. Commercial real estate provides income in the form of dividends, although there is no minimum investment amount. With the right business structure in place, it is also possible to receive tax benefits from your investment. And lastly, properties owned by the REITs do not experience the same value fluctuations frequently seen in the broader real estate market.

Although A-REITs as a whole performed rather poorly last year due to excess holdings in the domestic market, an investment in the right firm could be very profitable in 2010. An A-REIT has the ability to purchase property offshore, and this may present the best opportunity.

If this doesn’t make sense, consider that Australian real estate values have held steadier than other global markets, largely due to the stronger dollar here. In other countries, such as the US, real estate values have experienced a sharp downturn. This presents the best opportunity for an A-REIT, with its greater purchasing power, to find some real bargains on assets expected to increase in value as the economy recovers.

Many pundits expect that A-REITs will take a different focus this year, scaling back their investments while strengthening their core competencies, whether this is in property management or in finding the best deals on commercial buildings. Simplified operations across the board present a better opportunity to adequately compare A-REITs and decide on a firm that will best represent your interests.


Richard Colum

Western Australia



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