Monday, June 17, 2013

What are the risks involved when investing in REITS?

  • Returns are not guaranteed
    The total return of a REIT is subject to the performance of the property market. Hence, the unit price of a REIT may go down if its underlying properties drop in value.
  • Loss of control over investment
    Investors will not have direct control over the management company’s investment decisions like when to buy or sell certain real estates, or how they will be managed.
  • Market factors
    REITs are also subject to market demand and supply. As such, market fluctuations, confidence in the economy and changes in the interest rates may affect REITs price.

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