Our Sites:
Can’t afford your own home or investment property? Don’t want to put all your eggs in one basket? Maybe a property trust is more suitable for you.
Known worldwide as Real Estate Investment Trusts (or REITs) Australia’s Listed Property Trusts (LPTs) have become a stable and lucrative choice for both small scale and more cashed-up investors.
Listed Property Trusts allow investors to put their money in a diversified portfolio of property, and generally bring returns between five and nine percent a year.
Getting started in property
One way to get a start as a property investor is to form a property trust with other small investors. Alternatively, you can by into an established property trust, many of which are run by professional fund managers and some larger investment groups. For a new investor, finding a fund manager maybe a safer way to get started. Professional funds managers have more experience and industry knowledge and will be able to help you avoid some potential investment pitfalls.
Another advantage of a managed property trust is that smaller investors can get access to some “bigger” properties and strategies. Some trusts – like some managed funds – will allow people to enter the trust with as little as $500.
If you are not sure where to begin, Property Investment Research is an independent body that provides information about the best property trusts to invest in.
Listed real estate funds
Currently, Listed Property Trusts are one of the largest sectors on the Australian Stock exchange and make up 12 percent of the world’s listed real estate (Australians love real estate!). The advantage of LPTs is that they have the potential to earn an investor rental income and gains from increases in property value.
In addition, any income earned on a Listed Property Trust can be deferred, meaning that no tax has to be paid until the LPT is sold – that includes tax on rental income as well. They are also very low maintenance, as investors in the Listed Property Trust don't have to worry about maintenance, tenant management, administration or any improvements to the property.
Diversified property trusts
Most Listed Property Trusts include a diversified selection of properties across various sectors and locations. They might include a CBD high-rise building in Sydney, a shopping mall in Melbourne and an apartment block in Brisbane. In this way small investors can invest in properties in good locations, getting greater potential income from rent.
Most Listed Property Trusts invest in stable commercial properties. They could also invest in new projects however. The latter is more risky but could potentially earn more money in the short term.
The types of commercial properties commonly attractive to investment trusts range from warehouses, factories and industrial parks to hotels, office buildings and even overseas developments.
Small-time property investors
After the bubble economy burst in Japan, many people could no longer afford to invest in property. Investing in J-REITS, Japanese Real Estate Investment Trusts, has been an increasingly popular choice for the average Japanese person.
Australia’s property market is not looking like slowing down any time soon, making it almost impossible for many to buy their own properties. Listed Property Trusts allow smaller investors to access the property market when property prices are high. If these smaller investors do not buy into a fund using a margin loan there is the added benefit of being able to avoid the costs associated with loan repayments, maintenance and council rates.
Established trusts
Most of Australia’s largest financial groups have listed trusts on the stock exchange that include properties in Australia and other parts of the world. Macquarie Bank, for example, has four listed trusts that cover the shopping centre, office building and hotel sectors. While AMP, and other big names, also offers property trusts and managed funds with an emphasis on property.
