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Real Estate Investment Trusts  (REITs)  are  internal schemes that own, manage or invest in real estate.

Securities issued in terms of a REIT registered by the Commission can be traded on a Stock Exchange in the same way as other long-term securities  like equities or bonds.

Unlike a real estate developer who builds or constructs commercial properties for sale, REITs own, manage or invest in real estate as part of investment portfolio for the purpose of generating income.

In a typical REIT, funds are pooled from various investors who in turn become unit holders in the scheme.

The funds raised are used to purchase a pool of real estate properties.

Income producing properties often targeted by REITs include apartments, hotels, resorts etc.

These properties are then leased out to tenants.

In return the income flows back to the unit holders (investors) as income distributions.

Zimbabwe’s property market is currently dominated by institutional investors.

This is mainly due to the fact that property market prices are beyond the reach of many hence a preserve of only those investors with capacity to  mobilise long-term capital.

As Zimbabwe’s property market is expected to develop, REITs are a potential way for more investors (including retail investors) to participate in large scale income producing properties.

They allow investors to reap benefits of indirectly owning property as an asset class.

As with all investment products, the risk assessment of REITs is very crucial to ascertain whether the product fits your profile and your overall financial plan.

Before investing or purchasing any product you should always seek independent financial advice.

The share price of REITs is determined by market forces.

Therefore, investors can either receive capital gains or losses upon selling depending on the forces of demand and supply.

Real estate is typically sensitive to changes in interest rates, as well as other risks that immovable property is prone to.