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Rights but REITs : opposing the global introduction and consequences of Real Estate Investment Trust

Realizado por Knut Unger, Habitat Netz


Throughout the world, Real Estate Investment Trust (REITs) are playing a rapidly increasing role in organizing private financial investments in housing and cities. After a longer period of development in Northern America – with disastrous consequences on social housing – about 20 important countries have introduced national REITs during the recent years and another half dozen is planning to do the same within the coming year.

Although negative consequences in the USA, Canada and elsewhere are obvious, the introduction of REITs in most of the countries took place without protests and even without critical debate. They just happened in the extra-democratic spaces where financial lobbyists make their deals with governments. REITs are one of the examples of the silent over-taking of the worlds’ economic governance by the neo-liberal promoters and profiteers of financial globalism.

Germany in this game – maybe besides Honkong - plays the curious role of an exception. Since 2005 the huge national tenants association as well as a majority of the co-governing Social Democrats (SPD) and other political and housing actors developed a fundamental opposition to the so called rationalism and transparency of REITs.

This dossier aims to give an overview on available information about the global role of REITs and it’s consequences. Based on the critical debates in Germany it tries to suggest arguments against copying the US-REITs-model. It raises questions about the needs and chances to make REITs a prominent issue in international housing rights – and anti-privatisation struggles.


Vancouver, World Urban Forum, June 2006. During the opening ceremony of the third World Urban Forum HIC and a couple of other organisations celebrate a protest in front of the entrance of the luxury conference hall. “Peoples orders” against violations of housing rights had been discussed and prepared in the movements the weeks before. Now representatives explain and read them to the protesting crowd: Forced mass evictions an Nigeria, Zimbabwe, India, the Philippines… Cuts of subventions on social housing in the USA, in Canada… Missing support for the victims of natural disasters like the Tsunami and Katrina…

Among them: One “order” which at the first view seems come from a totally other sphere. The sphere of yields, assets and securitization, normally populated by bankers and fund managers but not by social movements.

A “peoples order”, prepared by tenant activists from Germany, the UK and USA, states:

« By introduction of Real Estate Investment Trusts (REITs) at national stock exchanges the U.K. and Germany government plan to open given sectors of regularized, public, social or affordable rental housing for concentrated financial speculation at large scales, as experience, for instance in the United States has shown.

REITs in the real estate sectors encourage the irreversible replacement of long-term social investment at low rates of profit by short-term financial investment at very high rates of profit. REITs stimulate public, municipal, industrial and other such owners to sell off and privatise their properties.

REITs within the rented housing sectors lead to higher rents, disinvestment and demolition, large-scale privatisation, the splitting of rented housing into individual leaseholds and freeholds, the replacement of social housing by expensive condominiums, forced evictions and loss of social accountability, participation and local jobs. Municipalities and other public institutions lose strategic instruments with which to promote affordable housing and socially inclusive cities.

REITs, which are tax-free investments as long as most of the profits are returned to shareholders, lead to loss of tax receipts and to the selling off of public infrastructures. They lead to a massive concentration of financial power and anti- democratic political influence and make housing markets dependent on international speculation bubbles. They are a threat to tenants world wide. »

What did happen that social housing movements not only blame governments for results of their policies on people – as they normally do – but warn against some future plan, which normally only financial experts are aware about? Let’s go back some months in time and only some hundred miles south the American Pacific cost.

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