Real Estate Investment Case Study

751 Words4 Pages
CHAPTER 1 INTRODUCTION 1.1 Background of study Real estate is an enabler of economic activity. It offer the space for businesses to operate it effectively provides the business infrastructure without which an advanced economy could not operate. Furthermore, high-quality, modern and innovative buildings contribute to maintaining the Kuala Lumpur’s reputation as an international trade hub and attract skills and capital from the rest of the world, creating further opportunities. Real estate also is a major capital asset which contributes investor a way to diversify and create wealth. Therefore, the real estate should be dealt with efficiently and to maximize both the value and returns of ownership. There are example for real estate…show more content…
According to Ashworth (2001), there are four characteristics that can influence the choice of investment which are security of capital, returns, capital growth and involvement. Moreover, Dubben and Sayce (1991) noted that investment is the act of laying out money now in order to receive financial recompense in the future. However, there is no guarantee of future rewards either in the form of income or capital appreciation. Thus, investment represents certain sacrifices for uncertain benefits. There are various types of investment instruments that available for the investor in Malaysia such as bonds or debt securities, equities, warrants, futures and options contracts and Real Estate Investment Trusts (REITs). Real estate investment has divided into two types which is direct and indirect investments. For most individuals, property investment is limited to home ownership without thinking about the ownership of shopping complexes, industrial or office buildings and so forth. However, REITs provide people opportunities to invest bigger real estate investment with smaller…show more content…
Unlike other listed real estate firms which commonly resell real estate assets post-development, REITs acquire and/or develop real estate with the objective of operating them as part of their investment portfolio. In its simplest form, a REIT is a legal entity created under a specific regulation to own and actively manage a portfolio of income producing commercial real estate (Newell, 2012). Some of the benefits brought about by REITs include increasing liquidity in a traditionally illiquid real estate market (Newell, 2012), enriching diversification in a mixed-asset portfolio (Wechsler, 2013) and enhancing information transparency in an often elusive real estate market (Lecomte and Ooi, 2013). Overall, the REIT structure was designed to provide a somehow similar vehicle for investments in real estate markets as mutual funds provide for investments in stocks. Overall, the market can be classified by offering four different types of REITS (Davidson et al., 2003): (1) Equity trusts where the assets are invested in ownerships claims to various types of properties like, e.g. residential, commercial or industrial property. (2) Mortgage trusts where the assets are invested in claims where interest is the main source of income like for example

More about Real Estate Investment Case Study

Open Document