How do I invest in property without owning it?

Investing in property isn't limited to buying a house and renting it out. By pooling your money with other investors to form a fund or trust, you can invest in several different properties or buy a portion of a building you may not have otherwise been able to afford. 

If you aren't buying a property directly, these investments may be accessed through superannuation, depending on your fund’s allocation to different investments. Otherwise, you may use a listed or unlisted fund or real estate investment trust (known as a REIT).

• Listed property investments in a fund or REIT are listed on the share market. This makes them more liquid or easily traded and converted into cash. Share markets can fluctuate, making these investments higher risk.
• Unlisted property investments are similar, however are not listed on the share market, meaning the fund or trust may not have an official, regulated marketplace for trading. You may be required to hold these investments until the fund is wound up, meaning they are less liquid and more difficult to trade.
• Both listed and unlisted funds can be single-sector funds, or invested in a single sector of the property market like retail or office buildings. They may also be diversified, or invested in multiple property sectors. Investments can be made in a range of assets, such as shopping malls, medical centres and hotels across a range of sectors, such as residential, retail, office and industrial property.

There are risks associated with all investments, including property. For example:

• Share markets can fluctuate for many reasons including economic developments, wars, civil unrest, pandemics and even the weather. This means that the value of property investments listed on share markets can rise and fall in a similar way to shares, making them more volatile.
• While investors in unlisted property investments may benefit from not being exposed to share market fluctuations, these investments also don't have a regulated marketplace for trading. This could potentially make their values less transparent as prices are determined not by markets, but by investment professionals managing the fund or trust. Because unlisted property investments don't have an official trading place, they may also be harder to buy and sell – meaning, investors may need to hold them until the fund is wound up.
• Tenants of direct property investments may be unable to pay rent, potentially impacting the owner’s rental income and ability to meet debt repayment requirements.

Both listed and unlisted property investments have the potential to offer attractive, risk-adjusted returns over the long term – typically through rental income that is paid to investors of a fund or trust through regular distributions. Returns from a direct property investment can also come through rental income that may be paid either directly to the owner, or via a real estate agency managing the property on the owner’s behalf.