Tuesday, October 09, 2007

Is a REIT right for you?

REITs are real estate investment trust which funnily enough invest in real estate. Given our obsession with owning real estate, I guess the only reason they've just been introduced in Kenya is because of the herd mentality of most businesses in Kenya. And CMA...

REITs are very similar to unit trusts in that you buy units which provide you with both capital gains but also dividends in form of a share of the rental income. As a rule, REITs must redistribute 90% of the rental income or capital gains realised over a financial year. In the West, REITs mainly invest in commercial rather than residential property. However, in the context of our
housing crisis, REITs could benefit by going into the residential market. Like unit trusts, they'll give you access to the real estate market without the hassle of going through dodgy builders architects and the like.

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