Property Investment Options
2)PROPERTY FUNDS (Not listed in stock market)- By contributing in closed-ended or open-ended property funds that acquire and manage real estate assets on behalf of the investors that have contributed in the fund. Performance will depend on the performance of the real estate markets within the fund's property holdings compete, idiosyncratic property and location characteristics and the fund's management skills. Liquidity is also a limitation here as selling the property holdings at the desired prices takes several months.
3)LISTED PROPERTY COMPANIES - By purchasing shares of listed property companes or REITS. Share price movements, and therefore investment performance, depends to a significant extet on changes in investor psychology nationally or internationally. Therefore,listed property investment performance is considerably more volatile than private investment performance, where price changes are slow due to the lag of frequent transactions and the slow adjustments of supply and demand. A major advantage of investing in shares of property companies is considerably higher liquidity compared to direct property investments.
4)PROPERTY DERIVATIVES - By taking positions in property derivative products that are linked to widely accepted property indices such as IPD indices in the UK or the S&P/Case-Shiller Home Price Indices in the US. However, the market is still immature and liquidity is not as high as in the case of shares of REITs and listed property companies.
In considering these property investment options investors need to examine which of the four strategies fits their risk profile and are more likely to achieve their return objectives.
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