I just noticed that REITs are investment tools that most people still don’t fully understand, even though they’ve been available in Thailand since 2018.

Actually, a REIT is a real estate investment trust. The REIT fund manager raises capital from investors, then uses that money to manage various properties, such as houses, warehouses, hotels, and shopping malls—leasing them out and using the resulting income to pay dividends to investors.

Why is it interesting? Because you don’t need a large amount of money to invest directly in real estate. Just buy REIT units to earn returns from leasing those properties. What’s more, REITs are tightly regulated, provide transparent information, and are easy to buy and sell on the stock market.

However, there are also points you need to watch out for. REITs mainly come in two types: Freehold, where you actually own the property, and Leasehold, where you only have the right to use it. When the lease contract ends, the value will gradually decrease.

Another point is that REITs are fairly sensitive to changes in interest rates. When interest rates rise, REIT prices usually fall because investors look for other options that offer higher returns. In addition, the dividends you receive are subject to a 10% tax.

The income generated by REITs also depends on economic conditions. If the economy is doing well, the number of tenants increases and returns can be higher. But if there’s a crisis or instability, income may decline.

For examples in the Thai market, there is CPNREIT, a Leasehold REIT of Central; IMPACT, which is an Freehold REIT of Impact Muang Thong Thani; WHART, which manages warehouses; and JASIF, an infrastructure fund that invests in fiber optic cables. Each one has different dividend payout rates and investment characteristics.

The bottom line is that REITs can be a good option if you’re looking to build an income stream that’s higher than fixed-deposit interest, with returns that are relatively consistent. But you need to understand the risks and the characteristics of each trust before deciding to invest.