Benefits and Barriers of Introducing REITs in Denmark

Trine Ejsing & Hans Christian Hansen

Student thesis: Master thesis

Abstract

REITs are recognized internationally as a liquid product for indirect real estate investments. REITs have existed in the U.S. since 1960 and has since then been implemented in 35 other countries worldwide and even more are actively considering adopting the structure. The diversification benefits of adding REITs to mixed-asset portfolios have been analyzed vigorously in both academic and practitioner literature. Generally, risk-adjusted returns of REITs have been found to vary substantially depending on the examined period; however, the majority of authors find to a lesser or greater extent diversification benefits when including REITs in mixed-asset portfolios. In the present thesis, we find further support that there indeed exist diversification benefits which both investors, private and institutional, and the economy in general could profit from if REIT were to be implemented in Denmark. Currently, no adequate substitute to REITs have been found to exist on the Danish market, and as such an implementation would add more options for the investors to diversify their portfolios, especially for the private investors. Furthermore, no major barriers have been found to hinder a successful introduction of REITs in Denmark. Therefore, we conclude that there are no substantial reasons not to adopt the REIT structure in Denmark − on the contrary the benefits appear to be ample.

EducationsMSc in Finance and Investments, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2017
Number of pages162
SupervisorsJens Lunde