There are two ways a manager can invest in property. They can either own it directly or they can invest in listed property trusts that own it directly. The term listed refers to listing on the stock exchange.
Listed property trusts are considered by many to be an equity investment as the units are listed on the stock exchange and are therefore subject to market sentiment. Listed trusts will normally produce quite good levels of income, which is reasonably tax effective, together with reasonable levels of capital gain over time. A major benefit of listing is immediate liquidity as the units may be sold to a ready market at any time.
Unlisted property investments are now subject to stringent rules, which in turn make them a relatively illiquid investment with long redemption periods. Provided this suits the investor and it is a smaller part of their portfolio, investors need to be well aware of the lack of liquidity before investing as you cannot sell separate parts of the property.
Managers who invest in listed funds can give investors the benefit of a spread of property throughout the market and this can be appropriate in a portfolio, especially for the smaller investor.
It is important to note that you can invest in direct property and property trusts, these are essentially 2 different products. We can provide advice regarding direct property strategy advice as well as other forms of property investments, subject to our APL.
For more information on property, contact us to arrange a free initial interview.