Global Investing

CHAPTER 18Real Estate

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The global real estate sector includes companies that predominately own and manage real estate assets across a variety of property types from distribution centers to office skyscrapers, business parks, multi-family residential properties, shopping malls, data centers, cell towers, and self-storage facilities. Real estate offers unique characteristics that can enhance the risk-and-return profile of an investor's portfolio. It is generally regarded as a separate asset class from stocks and bonds, as real estate has historically exhibited relatively low correlations with other sectors of the market.

Publicly traded real estate companies are a preferred way for investors to gain access to real estate properties capable of generating consistent income and attractive capital gains. Investing in real estate through the public markets has four main benefits over private (direct) real estate investing. First, private real estate is illiquid. In addition to the lengthy sales process for an individual property, many fund investments in private real estate have a multi-year lockup period preventing investors from exiting. On the other hand, publicly traded real estate securities are exchange traded and can be transacted on during regular market hours. Second, most private investors limit themselves to more traditional property types like office, residential, industrial, and retail, but there are more niche opportunities in the public markets for ...