A legislative framework for Real Estate Investment Funds (REITs) will be able to be traded on the Malta Stock Exchange Markets (MSE) following administrative procedures implemented in 2019. The news was announced by Finance Minister Edward Scicluna during the 2019 Malta Budget as a fiscal means to provide investment opportunities within the property market.
This comes at a time when Malta is enjoying a thriving property market, and will now allow individuals to make an investment in large real estate projects as well as benefit from the increase of value in the property. Investors can do so without owning a physical property, by becoming shareholders who invest in REITs listed on the stock exchange, ultimately buying shares in property and receiving dividends.
REITs Frameworks across the world
REITs refers to those companies or entities that own such properties. A framework for REITs has been established in 35 jurisdictions globally, 14 of which within the EU, and differ slightly from one jurisdiction to another. Depending on the country, REITs can refer to commercial property making an income through rental, such as office space and retail property, to property for social causes, such as hospitals, social housing or homes for the elderly, thereby contributing to the community.
Benefits of REITs
REITs allow for tax efficiency and make possible the construction of large real estate projects requiring liquidity. In addition, they allow investors with lower capital limits to benefit from such projects that they would not be able to be part of otherwise. Further advantages of a REITs framework include:
- Professionally managed properties
- Ability to diversify one’s investment portfolio
- Property management not handled by investors themselves
- REITs not dependable on bank financing
- Allow for funding for property with social purposes
REITs frameworks offer investors transparency as most systems require REITs to be listed whilst the European Public Real Estate Association requires the reporting of disclosures and other requirements.