Property Feeds
Get the latest properties direct to your desktop 
|
|
Bulgaria Property Funds |
|
Property Fund is a term concerning a mutual fund for investment in real estate. The fund mobilized from the sale of investment units will be allocated to invest by purchasing or leasing of residential and commercial properties and developments. Property Funds are prescribed to be closed-end funds and may be listed on the stock exchanges Many investor prefer to invest trough a property fund. Here follow the advantages of this kind of investments and the list of the funds, whose portfolio includes Bulgarian properties. There has been a very significant increase in the level of indirect investment in real estate sector in Bulgaria over the last two years. The investors are mostly represented by limited partnerships, as well as offshore unit trusts. The traditional base of property investors in these vehicles has expanded, to include not only institutions and life companies, but also private equity, high net worth and non-resident investors.By investing in property through a managed fund, the risk of loss is reduced through the fund's ability to diversify across a range of different property sectors, such as commercial, office, industrial, hotel and retail.The advantages of investing in property fund:§ Property funds provide strong capital growth. § Property funds provide regular income. § The risk is reduced through diversification where the fund invests across different property sectors. The number of property funds launched in recent months is increasing, causing a bit of a stir in the Bulgarian property market. Most of these products are global property funds, a relatively new asset class for local investors. Global property funds mainly invest in REITS (Real Estate Investment Trusts). These are securities that sell like a stock on the major exchanges and invest in real estate directly, either through properties or mortgages. REITS receive special tax considerations, and typically offer investors high yields as well as a highly liquid method of investing in properties. These trusts invest in properties and are responsible for the equity or value of their real estate assets. Usually the revenues come from rents of the properties.Property funds can also invest in other property investment companies or property developers. There are a lot of kinds of investment funds available, which differ from one another.Here follows a list of property funds, either planning to or already investing in Bulgaria's properties with budgets ranging from 10 mln to 50 mln EUR:§ Euro Property Prospects (B.V.I.) Ltd § Letterstone Emerging Europe Fund Limited (LEEF) § Lewis Charles Sofia Property Fund § Quinn Group (Irish fund) § Global Emerging Property Fund § Euroterra Bulgaria AD § Dawnay Day Carpathian § European Convergence Property CoPLC (ECPC) § TBI BAC Real Estate § Orchid Developments § Bulgarian Real Estate Investment Fund § The Black Sea Property Fund The property investment fund is a kind of mutual funds aiming at maximizing the returns of the investors. Real estate funds are founded by a group of real estate experts or they count on real estate management firm to manage property assets for the investor. Many property funds have overseas properties or properties from other countries in their investments portfolio. Real estate funds buy, develop and sell property and share profits with investors from any capital appreciation on the sale of property. Apart from sale of property, property funds also make money from rentals on property owned by them.Some funds may not actually own property as that may involve above-average risk from volatility in property prices. Instead such funds invest in bonds that are secured by property. The coupon rate that they receive on these bonds is then distributed to investors as dividends.Property funds like regular mutual funds charge the investors for property management, real estate brokerage, administration and marketing. Investors’ returns on property fund units are evaluated only after accounting for fees and charges.First let us understand what real estate/property funds are all about. If you have a fair idea about how mutual funds work, then you won't have a problem understanding real estate funds, because they both work towards a common cause - maximising returns for the investor. Like mutual funds, real estate funds (or Real Estate Investment Trusts - REITs as they are commonly referred to in the US) are founded by a group of real estate professionals/experts to `manage' property/real estate for the investor.Advantages of property assetsAfter stocks, there is probably no asset class like property that can preserve the value of your portfolio from the eroding effect of inflation. It is widely held that gold is also a good foil to counter inflation. But over the years, gold has performed poorly on the return parameter.Another important touch a real estate fund adds to your portfolio is that of stability. Although property prices can also be volatile, the volatility is a far cry from what investors are used to seeing in stocks for instance. When turbulence in global oil prices or economic upheavals rock your portfolio, you can expect real estate/real estate funds to be the rock in your portfolio.Risks of investments through a property fundProperty funds have the same risks that are associated with debt mutual funds. For instance i.e. you could make the wrong choice while selecting a real estate fund in which case you could be saddled with a non-performer. Although this is not a limitation with real estate funds per se, it serves to highlight that there can be poorly managed real estate funds just like there can be poorly managed debt funds.If with equities three years is the minimum investment time frame, then with real estate investments you need to be even more patient. Buying property, developing it and then renting it out or selling it, is a high gestation activity. It could take some time before your real estate mutual fund actually starts making money.Property investment funds are growing in popularity. The key features and advantage of using Property Fund folloe herein. · Great diversification within an investment portfolio; · Good potential for returns of investments; · Very low risk for the investors; · Qualified management of the properties; · Investment in expensive residential and commercial projects which are not within the bounds of · possibility of individual investors; · Returns from properties and from other property funds stocks. Real Estate Investment Trust (REIT) is a special tax exempt property investment vehicle.
Like investment trusts, their shares are traded on the stock exchange markets and capital remains fixed. Real Estate Investment Trusts can acquire a number of properties from a wide variety of sectors, while the key advantage is that taxes are paid by the investor rather than the fund. REITs will be very useful for investors seeking income directly without a company taxation structure causing them to lose some irrecoverable tax before the income reaches them for gross income purposes. REITs will open up property investment to more individuals, which can only benefit the health of the market.There are some restrictions for the REITs: · At least 90 per cent of a REIT's net profits must be distributed to shareholders each year. · The shares must be listed on a recognized stock exchange. · No single investor can directly or indirectly control ten per cent or more of the share capital or voting rights in a REIT. · At least 75 per cent of the trust's assets must be in property investment. · 75 per cent of its income must be in property rentals. · Taxable profits have to be 1.25 times higher than interest on loans. There exist many overseas REITs. In the UK they will be introduced in January 2007. REITs have been very successful in other countries although in most cases they have taken many years to become well established. This kind of investment vehicles promotes the efficiency of both the commercial and residential property investment markets.The key objectives for the introductions of Real Estate Investment Trust are:· Improving the quality and quantity of finance for investment in both commercial and residential property; · Expanding access to a wider range of saving products on a stable and well regulated basis; · Ensuring the payment of a fair level of tax by the property sector, to protect all tax payers; · Supporting structural change in property markets by reducing costs and improving flexibility and quality for tenants.
|
|
|
