REITs to attract more investors

THE advent of Real Estate Investment Trusts (REITs) has been described as a unique opportunity for massive growth of the property, insurance and pension fund sector as it has several embedded benefits and has prospects to lure investors.

Top of the benefits include investors receiving dividends regularly and taxation matters.

This came up during the two-day inaugural REITs conference which ends today in Bulawayo.

The initiative aims to bring together industry professionals, stakeholders and investors fostering discussions on the current real estate landscape and exploring investment opportunities.

The conference which has brought in experts from different organisations including the Insurance and Pensions Commission (Ipec) and the Securities and Exchange Commission of Zimbabwe is organised by the Zimbabwe Stock Exchange (ZSE).

A REIT is a regulated investment vehicle under the Collective Investment Scheme Act that enables the issuer to pool investors’ funds for the purpose of investing in real estate.

In exchange, the investors receive units in the trust, and as beneficiaries of the trust, share in the profits or income from the real estate assets owned by the trust.

Ipec commissioner Dr Grace Muradzikwa told Business Chronicle that REITs present several benefits which will culminate in the growth and uptake of real estate investment.

She said the association will address challenges that were being faced by pension funds in property investment.

“There will be an increase in investments in the property sector even though there are a few areas that we were referring to which include the taxation issues which still need clarification. In the meantime, if we look at the structure of the REITs, it has all the advantages that the investors have been looking for and I am hopeful that the uptake will be good,” said Dr Muradzikwa.

“As insurance and pensions regulators this is a development that we have been advocating for mainly coming from the fact that when we look at the portfolios of the pension funds there is a concentration in property and equities. We are finding that with a lot of our processes such as transfer and dissolutions of funds and exits, it was very difficult for the pension funds because they do not have the liquidity that is required.

“It is also difficult to transfer real assets, so they were resorting to monetary assets which are prejudicial to policy members and pensioners, that is why we welcomed REITs as we are seeing it as the solution to the challenges that the pension industry was seized with,” she noted.

ZSE chief executive officer Mr Justin Bgoni said REITs are a new concept in Zimbabwe set to bring development in the property sector citing that other countries including neighbouring South Africa have already witnessed their positive impact.

“The REITS is a new concept and we want people to know about. We want to embark on the process through the form of an association of professionals who then can teach the market,” said Mr Bgoni.

“There are some regulations that are required to make this successful, so we need a board of people that can lobby the Government and also we want experts who can teach investors on REITs.”

At present, Zimbabwe has one listed REIT on the ZSE, Tigere REIT.

The exchange has indicated a pipeline of other REITs set to list on both the ZSE and the Victoria Falls Stock Exchange (VFEX) soon.

He said REITs have a benefit for investors because they get their dividends regularly as there are tax benefits for the company.

Integrated Properties chief executive officer, Dr Mike Juru said the country has local investors in the property sector but REITs will bring in foreign direct investors.

“We can have foreign investments in the properties sector following the introduction of REITS. Look into the South African scenario, they have billions of rands in the sector and that money is not from that country alone but from foreign investors.

“So, the same can happen in Zimbabwe and we are looking forward to having proper structures that can help attract foreign direct investment in real estate,” he said. —chronicle