Diversification of Investment Portfolios through Real Estate Investment Trusts (REITs) in Zambia

Baleke Emmanuel and Christopher Mulenga

AfRES from African Real Estate Society (AfRES)

Abstract: The function that Real Estate Investment Trusts (REITs) play in diversifying investment portfolios has attracted much attention. These investment vehicles present an alluring chance for investors to expand the diversification of their portfolios beyond the traditional holdings of equities and bonds. This overview seeks to give readers a thorough knowledge of the critical role that real estate investment trusts (REITs) play in boosting portfolio diversity, focusing on the rapidly developing economy of Lusaka, Zambia. Apart from equities and bonds, in the past, investors mostly allocated their funds to conventional asset classes such as equities and bonds. However, due to the limitations of these traditional assets and the desire for more diversification, interest in alternative investment possibilities has grown, with REITs emerging as a prominent rival. Unlike equities and bonds, which are subject to market and economic cycles, REITs frequently have a unique risk-return profile. Because of their weaker connection with other asset classes, they make a compelling option for portfolio diversification. As an alternative investment vehicle, Real Estate Investment Trusts (REITs) have become incredibly popular worldwide, offering investors a way to diversify their portfolios outside of traditional asset classes. Regarded as a major turning point in the development of real estate financing, the introduction of REITs into the international financial market has presented investors with many benefits and prospects. In Zambia, where REITs have been gaining popularity, this study focuses on the function of these investment vehicles in diversifying investment portfolios. Real estate investment trusts (REITs) play a unique role in the thriving economic centre of Lusaka, Zambia. REITs invite investors to participate in the growth of the local real estate market as the Zambian real estate industry continues its significant growth and development. Individuals and institutions can profit from income potential and diversification advantages by investing in Zambian REITs, and they can also help the real estate industry in the nation grow. This study project aims to clarify the complexities of REITs in relation to Lusaka, Zambia. It seeks to investigate their possible benefits, the laws that control them, and the practical ramifications for Lusaka investors. The goal of this research is to provide a thorough grasp of how REITs might function as a crucial part of diversified investment portfolios in the particular economic environment of Lusaka, Zambia.

Keywords: Diversification; Investment; Portfolio; real estate; REITs (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2024-01-01
New Economics Papers: this item is included in nep-ure
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