Real-estate funds emerge in Croatia's financial market (2)

Direct investing in real estate implies buying of physical property with all rights and obligations emerging from ownership. Exposing to real estate investment in direct way includes unfavorable investment characteristics which may be overcome with indirect ownership through the investment in marketable investment units of real estate funds. Real estate funds are collective investment schemes that facilitate the channeling of funds in various real estate investment activities. Experience of numerous states with developed real estate funds industry emphasizes importance of designing regulatory frameworks that are supportive of investment. Regulatory provisions in the Republic of Croatia dictate founding of real estate funds exclusively in form of public closed-end fund. Croatian closed-end funds are public joint stock companies with various operational restrictions and not tax exempt unlike open-ended funds designed for investing in other asset classes. Unclear investment profile of regulated real estate funds and absence of tax transparent real estate investment vehicles are main reasons for the negative market trends, visible through reduction in number of active funds.