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Investing in International Real Estate through International REITs

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Investing in International Real Estate through International REITs

  1. 1.  Since their debut in the United States and Australia, international real estate investment trusts (REITs) have gained popularity around the world. Many people choose to invest in international REITs due to their numerous advantages, such as hedging inflation. Real estate tends to build value over time, even if a currency depreciates. In addition, tax laws typically require REITs to distribute a majority of their income, leading to strong yields and less money for management to spend on experimental, risky projects.
  2. 2.  International REITs also have the benefit of diversifying portfolios across both asset classes and geographic locations. At the same time, international REITs come with a great deal of risk. These investments often carry a degree of political challenge as land rights and taxation issues come into question. Additionally, rapid changes in currency can affect dividend distribution even if the true value of real estate remains unchanged.
  3. 3.  Tax inefficiencies can also inhibit the value of international REITs. Finally, international REITs tend to be illiquid and opaque, thereby making them a poor choice for investors with short-term goals.

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