REITs operating mode: international experience and system selection -Part 2

Si Gyeongmin

Oct 01, 2021

2. Main REITs operating mode

REITs originated in the United States in the 1960s, and then gradually expanded to Europe, Australia, Japan, South Korea, Singapore, and other countries and regions, becoming a keen investment tool of various countries. It is of great significance in broadening investment channels, activating the real estate market, cultivating and improving the capital market, and promoting social development.

Due to the differences in the legal systems, economic development levels, and legal traditions of various countries (regions), the selection of REITs modes is also very different in various countries (regions), mainly as follows:

(1) The REITs mode of non-specialized legislation in the United States

1. REITs make the general public become real estate investors

Before the 1960s, only companies and wealthy individuals were able to invest in major real estate projects such as shopping malls, industrial parks, and medical facilities. In order to change this situation, the US Congress passed the "The Real Estate Investment Trust Act of 1960”. Economic incentives have led investors to pool their resources to form companies that invest in major real estate assets, providing ordinary Americans with the same opportunities as elites. Three years later, the first real estate investment trust fund was established. Due to the incomplete supporting laws and regulations, REITs developed slowly in the United States. In 1986, the US Congress passed the Tax Reform Act of 1986, which not only gave REITs tax incentives, but also expanded their business scope. This greatly stimulated the enthusiasm of investors, and REITs began to flourish.

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