Real estate is an asset class with low correlation to other types of investments; it is therefore a useful tool for the reduction of risk through diversification. In an environment of uncertain stock values and interest rates, real estate is a particularly attractive investment because it is a steady, income-generating asset class with lower volatility than many other investments.
Real estate returns are supported by lease contracts which generate a steady source of income. The quality of tenants and lease contract terms are essential performance factors.
Another feature of real estate affecting investment returns is the potential for capital appreciation.
Investment experts have shown that, over time, an investment strategy will produce the best risk-adjusted returns if it mirrors the diversity of the underlying economy. Portfolio strategists recommend that a multi-asset investment portfolio should represent the total spectrum of investment opportunities, which leads to a significant allocation for property. This can further be diversified by investing in different property markets.
Characteristics of Real Estate
Bridgemer's Competitive Advantages
