While direct real estate investment involves buying a property, indirect real estate investment simply involves buying shares in companies that invest in real estate. This type of property investment includes shares, funds and derivatives.
Compared to direct real estate investments, indirect real estate investments have the following advantages:
- Lower transaction costs
- Higher liquidity
- More transparency
- Lower capital investment
Because indirect real estate investments require significantly less initial capital, there is often no need for external financing compared to direct real estate investments.