Real estate investment trusts: Investment approaches and application prospects in the Ukrainian real estate market

What the paper says

Type of the article: Research ArticleAbstractIn the context of macroeconomic instability, geopolitical challenges, and financial market transformation, real estate has gained increasing attention as an important asset class. The purpose of this paper is to conduct a comparative analysis of the financial efficiency of real estate investment trusts (REITs) that operate under income-driven and NAV-driven approaches in developed countries and to substantiate organizational schemes of investment funds for the development of Ukraine’s REIT segment. The analysis shows that although REIT regimes differ across jurisdictions, they share common structural features that may be considered in adapting Ukrainian legislation to international standards. Based on a system of key financial indicators and data from international associations (INREV, EPRA, NAREIT), consulting reports, and stock market statistics, the study identifies two dominant approaches. The income-driven approach, typical of listed REITs in the United States, emphasizes stable cash income, liquidity, and market transparency. In contrast, the NAV-driven approach, characteristic of European non-listed real estate funds, focuses on long-term growth in net asset value. For Ukraine, the study identifies major barriers to REIT implementation, including underdeveloped stock exchange infrastructure, high entry thresholds for investors, and the absence of mandatory profit distribution requirements. Organizational schemes of non-listed investment funds based on the NAV-driven approach are proposed as a more feasible framework under current financial conditions, particularly in transitional economies with underdeveloped capital markets, and may serve as a foundation for the post war development of the Ukrainian REIT segment.