REITs act as a bridge between the worlds of housing and urban development on one hand, and institutional investors and financial markets on the other.
[9] In November 2014, equity REITs were recognized as a distinct asset class[10] in the Global Industry Classification Standard by S&P Dow Jones Indices and MSCI.
[11] REITs were created in the United States after President Dwight D. Eisenhower signed Public Law 86-779, sometimes called the Cigar Excise Tax Extension of 1960.
[16][17] As of 29 January 2021, the global index included 490 stock exchange listed real estate companies from 39 countries representing an equity market capitalization of about $1.7 trillion.
The industry struggled during the 2007–2008 financial crisis, after which listed REITs responded by deleveraging (paying off debt) and re-equitizing (selling stock to get cash) their balance sheets.
The REIT scheme will provide unit holders stable cash inflows from the income generating real estate properties.
In November 2015 there were three listed REITS on the Nigerian Stock Exchange:[24] Skye Shelter Fund, Union Home and UPDC.
A Haldane McCall REIT did not list after failing to reach the minimum 50% subscription in a January 2015 initial public offer amid poor market prospects.
The only federally approved Freezone within the UAE is the DIFC itself so therefore any properties outside this zone are purchasable by local Gulf (GCC) passport holders only.
Emirates REIT has a portfolio of over US$575.3 million consisting of a total of seven properties primarily focused on commercial and office space as of December 2014.
[28] REITs have shown numerous benefits over direct investment including lower tax rates and increased liquidity.
Hong Kong issuers' use of financial engineering (interest rate swaps) to improve initial yields has also been cited as having reduced investors' interest[30] As of July 2012 there are nine REITs listed with a total market capitalisation of approximately €15 billion which amounts to almost 2% of the total global REIT market capitalisation.
[32] Indian REITs (country specific/generic version I-REITs) will help individual investors enjoy the benefits of owning an interest in the securitised real estate market.
These projects encompass various asset types, including industrial parks, toll roads, storage logistics, ecological protection, clean energy, affordable rental housing, and consumer infrastructure.
The products have been operating smoothly, with active investor participation, gradually enhancing market functions, thereby creating significant scale and demonstration effects.
[40] In addition to REITs, Japanese law also provides for a parallel system of special purpose companies which can be used for the securitization of particular properties on the private placement basis.
REIT shares targeted in 2016 accounted for 7 percent of the United States market, which were subsequently sold for less than half of the initial value at $31 billion.
However, tax incentives plans demonstrate an intention of policymakers and lawmakers to boost the competitiveness of the market, and to encourage DIREs to be listed domestically.
The Securities and Exchange Commission of Pakistan is in the process of implementing a REIT regulatory framework that will allow full foreign ownership, free movement of capital and unrestricted repatriation of profits.
[citation needed] The Securities and Exchange Commission of Pakistan expected that about six REITs would be licensed within the first year, mainly large asset management companies.
[55] Introduced in 2014 to replace the Property Funds for Public Offering (PFPO) scheme, REITs have gained popularity, and the total market capitalisation has reached THB 85 billion across two million square metres of assets.
Further, due to the availability of the tax pass through mechanism to Unit Trusts, REITs also could benefit to be a viable business concept to Sri Lanka that will open new horizons for entrepreneurs to take the real estate industry to greater heights.
The Government feared that failing to introduce REITs in Germany would result in a significant loss of investment capital to other countries.
[69] Created in 2009, similar to British REITs, the SOCIMI (Sociedad cotizada de Capital Inmobiliario) boosted after a policy of fiscal incentives to help recover the biggest home prices crisis in Spain, in 2013.
[70] The legislation laying out the rules for REITs in the United Kingdom was enacted in the Finance Act 2006 (now see the Corporation Tax Act 2010 sections 518 to 609) and came into effect in January 2007 when nine UK property-companies converted to REIT status, including five FTSE 100 members at that time: British Land, Hammerson, Landsec, Liberty International and Slough Estates.
As a result, "Qualifying REITs" are exempt from the new entity-level, "specified investment flow-through" (SIFT) tax that all publicly traded income trusts and partnerships are paying as of January 1, 2011.
[85] Mexico has passed legislation to allow for the equivalent of REITs, known as FIBRAs[86] (Fideicomiso de Infraestructura y Bienes Raíces),[87] to be traded in the Mexican Stock Exchange.
Fibras offered investors an easy way to own Mexican real estate and pick up an attractive dividend at the same time.
[95] The rules for federal income taxation of REITs are found primarily in Part II (sections 856 through 859) of Subchapter M of Chapter 1 of the Internal Revenue Code.
To qualify as a REIT, an organization makes an "election" to do so by filing a Form 1120-REIT with the Internal Revenue Service, and by meeting certain other requirements.