Written by Olukemi David | From Ventures Africa

Over the past few years, much has been written about the need for the introduction and expansion of REITs (Real Estate Investment Trusts) in African real estate markets. The majority of South Africa’s publicly listed property companies have converted since the introduction of the REIT structure and the JSE now boasts 29 REITs. Nigeria, on the other hand has only three, Ghana has had one since 1994 and Kenya has recently been taking steps to create the necessary regulatory framework.

REITs, as we know, are publicly listed Real Estate companies that own and often actively manage property portfolios. Their activities, which may range from raw land acquisition through to operational property management, are largely restricted to the real estate sector. It is usually the case that around 75% of their income must come from real estate activities and they must also distribute the lion share of their gross income (depending on the jurisdiction this can be as high as 90%) in order to continue to enjoy their tax exemption.

So far, arguments in favor of REITs have been focused on the benefits to developers; the easier access to capital and also the boost to liquidity by allowing them to unlock the value of the real estate they currently own. Benefits to the real estate market as a whole have also been highlighted as it would bring some structure and transparency to what could be a rather opaque market.

But what about the benefits to investors themselves, the public and private investors who may seek to own these shares, with the aim of cashing in on the real estate arm of Africa’s tremendous growth story? Below are four main benefits of REIT share ownership.

Read more at Ventures Africa