It was an area much neglected in the past and not taken seriously; real estate today plays a key role in investment portfolios and has become an intrinsic part in the life of investors as well as property buyers. Developed countries have given it much significance owing to its great necessity for interested clients.

Some facts about global real estate

Real estate investment trusts (REITs) exist since a long time Australia, U.S and Netherlands. With the advancement in international communications, other continents adopted the structure of REITs and modified it according to their specific requirements. This has resulted in the emergence of global real estate market, where brokers and clients are ever conscious and well-informed. Many run their business broker franchises in various countries and enjoy this business a great deal. It’s no more confined to a few places only. Entire world has been affected by its immense benefits and importance. An estimate in 2005 revealed that the market capitalization of real estate operating companies(REOCs) and global REITs went up from $280 billion in 2001 to approximately $700 billion in 2005; that is a considerable growth indeed.

Real estate securities all over the world have a great variation in the characteristics from that of U.S counterparts so these are separate from them as an asset class. Global real estate has a unique role in these varied investment portfolio.

Real estate structures

Real estate is not all about direct investment in any type of property; it goes beyond that and has mainly two securitized structures. The two forms are REITs (Real estate investment trusts) and REOCs(Real estate operating companies).

REITs

These are structures that work for special tax processing in return of fulfilling certain conditions , for instance paying almost 90% of the taxable income on annual basis,  in the form of dividends; earning 75% of gross income from mortgage interest or rent from real properties and investing at least 75 % of the total assets in qualifying real estate assets.

Going back to its history, REIT existed in U.S since 1960. Afterwards, in 1969 Netherlands adopted real estate structures. New Zealand and Australia followed it eleven years later from U.S in 1971. According to Deutsche Bank PREEF Research article titled ‘ Global Real Estate Securities’ published in January 2007, there were 18 countries that successfully operated REIT structures; Germany got legislation in pending status.

REOC

As the name suggests, this is a listed real estate company that primarily deals in real estate investment as well as development. It has many business brokers (real estate agents) that serve clients and they deal in all types of property in commercial and residential sector. Some also offer franchise opening options for interested people and this spreads a chain working inside and outside a country. These have gone online with the revolution in internet and IT and now the access to them is easier than before. There inter connections are also faster and efficient now.

Global real estate will keep on moving ahead and the number of countries adopting REIT-type structures will surely increase all over the world.

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