Property funds (PAIFs and REITs)

Property funds come in different guises. In each case, their primary purpose is to facilitate collective investment in real estate. Investment in real property is popular and often seen as lower risk than investing on the equity markets.

As with other fund-types, collective investment in real estate (as opposed to independent investment) offers many advantages. These include:

•
the ability to share investment risk—funds can 'afford' to take greater investment risk because risk is spread more widely and, as a result, they can (potentially) access higher rewards
•
access to a larger and more diverse portfolio of property assets that an individual investor would otherwise not be able to afford, and
•
professional investment management

Collective investment in real property has been widely encouraged. Developments in the UK's tax regime to ensure that tax does not hinder or dissuade collective investment in property funds have been rapid over the last few years. Central to the UK's regime has been the development of:

•
the real estate investment trust (REIT), and
•
the property authorised investment fund (PAIF)

REITs v PAIFs

There is a good deal

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