What will be the likely impact of REITs on UK commercial property? Marcus Langlands Pearse of the New Star property team says:

"The introduction of REITs will bring greater liquidity to the commercial property market." He points out that the New Star Property Unit Trust, which aims to be primarily invested in direct commercial property, holds quoted property shares in order to achieve additional liquidity.

REITs will be subject to a number of tax rules. Marcus says: "The indications are that, at least in the early days, most REITs will be conversions of existing property companies. Launching new commercial property REITs will be more difficult. Some listed companies with large property holdings, however, such as retailers, may spin off their properties into REITs. Some housing associations may also launch residential property REITs.