Real Estate Investment

Real estate investment refers buying of lands and properties for the purpose of selling, leasing or to gain capital appreciation in the future.

Real estate investment has the potential of appreciating capital in the long run.

It also provides regular income stream by renting and leasing. Usually, investors purchase lands in economically strategic locations when prices are low anticipating future appreciation.

These lands are developed as residential or commercial properties in appropriate time with all modern amenities aiming huge profits.

The real estate is the largest industry and there are many players from individual investors to big corporate.

As the population increases rapidly, demand for properties both, residential and commercial growing constantly.

There is a great demand for hotels, shopping malls, sports and recreation complexes, commercial complexes, airports, etc. Realizing the potential in real estate business there are many players such as property developers, real estate consortiums and big corporate investing huge amounts. Mutual funds, investment banks and foreign institutional investors are also investing in real estate investments.

The real estate investments options are very limited to common man. Investing in real estate involves locking up large funds for longer term. Though the rewards are good in long run, there is some degree of risks and uncertainties always associated. Real estate investment is ideal for wealthy people and big commercial establishments.

As common investors do not have access to huge funds and their risk taking ability is very limited, their real estate investment ends with buying housing property for their own living. However, some investors buy plots and vacant lands for cheaper rates and dispose of them when the market is ripe. Banks and financial institutions facilitate buyers with loans boosting property sale. The Government also provides tax relief for housing loans with the aim of encouraging property purchase.

The Real Estate Investment Trust (REIT) is a real blessing for small time investors. They facilitate easy access to common men in real estate investment. The REIT is a professionally managed investment firm basically concentrating on buying and selling of real estate properties.

They function identical to mutual funds, mobilizing funds from the investors and employing them on appropriate real estate. They have access to huge funds and own professional investment team possessing wide knowledge in real estate industry. REIT buys, sells properties and distributes profits realized from real estate business to its share holder much like mutual funds.

REIT serves as an ideal investment vehicle for common investors; otherwise they are deprived of real estate investment options. On the other hand, REIT is exposed to greater risk as they are concentrated heavily on real estate business only.