The REIT market of Australia is considered one of the most developed, refined, and transparent REIT markets in the world. In 1971, Australia introduced its first REIT, and they were only behind Taiwan ROC, the US, and New Zealand who introduced REIT’s in the first place.
Almost two-thirds of the industrial-grade properties are securitized and offered publicly on the stock exchange. This is the highest rate in the world nowadays. There are some REITs who performed very well. Even a few years back, the investors are getting an increase of 10% per year.
Even though REITs are mentioned frequently and can be lucrative investment, you barely find any information online about the investment in the trust as a foreigner.
Key points in this guide:
- REITs (Real Estate Investment Trust) Australia list
- Are foreigners allowed to buy REITs in Australia?
- Foreign Institutional Investments in REITs.
- How to invest in REITs in Australia?
- Benefits of buying REITs in Australia
REITs in Australia stock Exchange
REITs currently listed on the Australian stock exchange:
Are foreigners allowed to buy REITs in Australia?
A-REITs are traded publicly and mostly listed on the major stock exchanges. That is why it is very simple to buy them with the help of brokers.
In Vietnam, you have to manage your local account openings and visit the country as well to buy REITs. But on the other hand, buying REITs in Australia is very much simple. Moreover, in Vietnam, the information you find online will be in Vietnamese.
If you observe, you will find that a lot of foreign REITs have Australian properties in their profile. But we barely see any ownership in Vietnamese real estate. We will go in-depth on this topic later in this article
The REIT rules in Australian real estate are not specific, and these properties can be listed publicly and non-publicly, and in some cases, sector-specific as well.
From an income perspective, REITs are considered as Managed Investment Trusts (MIT). If a foreign investor wants to qualify as an MIT, he cannot hold more than 10% in REITs, whether this investment is direct or indirect.
Foreign Institutional Investments in REITs:
Another key point to invest in Australian REITs is that there are no general issues for foreign institutions to invest in Australian REITs according to the laws. That is why foreign investments and control of trusts cannot be exceeded from a certain threshold. Otherwise, the fund managers will be treated differently.
According to the Foreign Acquisitions and Takeover Act of 1975, the following non-real estate transactions must be approved by Foreign Investment Review Board (FIRB).
- Acquisitions of a trust that are valued more than 252 million Australian dollars need approval from the Foreign Investment Review Board (FIRB). In case if the investors are from New Zealand and the US, the higher threshold of a subject is AUD 1094 million.
- Foreign government-related investors need approval if they are making direct Investments.
How to invest in REITs in Australia?
Just simple as investing in stocks, investment in Australian REITs is fairly easy and manageable. The first thing you have to do is to get in touch with a certified broker who will help you buy the shares in Australian REITs. For example, IG and Interactive Brokers are there to help foreign investors.
Also, keep in mind that if you invest in Australian REITs through brokers, the transaction fees for a single transaction can be up to 20 USD. In some cases, if the customer, individuals, or institutions buy in large volumes, the transaction fees can be stacked.
On the other hand, some brokers ask you to buy or sell a certain amount of REITs every month so that you can enjoy lower transaction fees.
Benefits of buying REITs in Australia:
REITs are considered a profitable investment because they deliver 90% of the net profit to its shareholders. Given below are some highlighted benefits of buying Australian REITs.
Access to the Market:
In recent years, there is a large number of foreign investors that are investing in Australian REITs. Most of the investors are from China. That’s why the Australian government has introduced different regulations for the investors that are non-residents or temporary residents.
If you are a non-resident foreigner and want to buy a real state in Australia, first, you have to apply for the permission from Foreign Investment Review Board (FIRB). In most cases, foreign non-residents generally buy new buildings or those secondhand buildings that are not established without any condition.
There is no limit to buy newly established units, but first, you have to take the approval for each procurement. When you invest in REITs, you have the permission to access both markets, real estate and commercial.
Good Profits:
REITs are considered as one of the most profitable investments in real estates. Those REITs that works in agriculture and industrial properties tends to perform well as compared to those that target the retail units and office space.
Even after the loss of -9% by A-REITs in 2020 due to the global pandemic of COVID-19, in recent years, the performance of REITs, among the others, are exceptionally good.
Given below are some historical profits in % by Goodman Group that is one of the biggest Australian REITs.
- June 2016: 3.49%
- Dec 2016: 1.99%
- June 2017: 2.95%
- Dec 2017: 2.78%
- June 2018: 2.52%
- Dec 2018: 1.94%
- June 2019: 2.10%
- Dec 2019: 2.05%
- June 2020: 1.65%
- Dec 2020: 1.55%
Liquidity:
As you buy the stocks, the shares of REITs can be bought in the same way so that you can quickly buy and sell them without any issue. When you invest in REITs, it is more liquid as compared to directly buying a physical unit.
Low Minimum Capital:
The investment in Australian REITs brings a lot of perks. One of them is that you have access to any Australian commercial and residential real estate in a prime location with the amount of as little as 500
US dollars. Australian REITs are virtually available for anyone just because of fractionalization and co-ownership.
FAQs:
Given below are some commonly asked questions by the investors. If you have any other question regarding this topic, you are free to contact us any time through email.
How many REITs are there in Australia?
Right now, there are 50 REITs working in Australia, according to the Australian Stock Exchange’s website. Among them, 3 REITs are working on a global level, and others are covering the Australian market.
What is stapled REIT?
Stapled securities are a type of structure that is used by most Australian REITs. In simple words, stapled security means 1 unit in the trust and one share in the company. The company’s share manages the asset base. That’s why it is known as stapled security.