Canada’s commercial real estate market rebounded sharply in the first half of 2010, with the value of deals increasing by 60 per cent as the debt markets recovered from the recession. There has never been a better time to invest in a REIT.
There are two types of REIT: public and private.
Public REITs are normally traded on stock exchanges and their values fluctuate like any other stock. The market price which investors pay for units does not necessarily reflect the actual values of the properties. These publics REIT can be volatile, when in fact, real estate should be a stable investment.
However, private REITs are not directly and immediately affected by fluctuations in the stock market – they are not prone wild price swings. Value is instead based on aggregate market value as determined by a third party appraiser. So, it’s clear that the unit price for private REITs is not connected to swings of or conditions in equity markets; private REITs are largely independent of their volatility.
- Charles Edwards blogs about capital management, Canadian REITs, and wealth building.
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