Hong Kong's smaller investors will soon have a more convenient alternative to buying actual bricks and mortar when investing in British property in the future. The creation of United States-style Real Estate Investment Trusts (REITs) in Britain was endorsed by Chancellor of the Exchequer Gordon Brown in his budget statement last week. The government will engage in a year-long consultation period before initiating the scheme. Under the proposals, smaller investors will be allowed to buy shares in these trusts, which will invest in commercial and residential property leased to tenants. REITs dominate the US investment market and are expected to do so in Britain. The government wants this new form of institutional investment to help expand the private rented sector and low-end housing sales market, because there is a lack of affordable accommodation for lower income earners. It also hopes the trusts will open up investment in residential property to those people who cannot afford to buy an actual property on their own. Market commentators believe property investment will explode following the introduction of REITs. Sabina Kalyan, property economist at Capital Economics, said: 'Overall, the UK REIT would have a dramatic impact on the structure of the commercial property investment market. We estimate that up to GBP70 billion (HK$999.75 billion) worth of property could be held in REITs in the medium term, equivalent to 25 per cent of the investment market. And if the experience of the US is any indication, in the long term REITs could become the dominant vehicle for property investment.' Commentators believe REITs will be a winner with investors because they are less risky than direct property investment. Liam Bailey, head of residential research at Knight Frank, said Hong Kong investors would benefit. 'The introduction REITs will have a beneficial impact on the quality of the private rented sector in the UK, leading to more professional management of bespoke rental units. The advantage for domestic and offshore investors is that they can spread their risk by effectively buying a tiny share in hundreds or even thousands of residential units in the UK.' Pierre Williams, head of communications at the House Builders Federation, said: 'REITs should be as popular as the investment property market has been. This is another way to invest in property without having to buy the freehold or leasehold of an actual property.' Robert Hadfield, analyst at landlords' website residentialinvestoralert.com, was concerned the residential market would be awash with money. 'I am not sure if the property market needs more money coming into it right now, because it is overheated. Money is still cheap and people still think wrongly that property is a one-way bet.'