CHAPTER 30Real Estate Benchmarks1

Benchmarks in the real estate asset class present problems because the assets in this class behave in a more diverse manner than those in other asset classes. In equities, the assets are traded almost continuously, so determining a correct price for a security—what the market is willing to pay for that security—is not difficult. In contrast, private market real estate assets, either individual properties or as a portfolio, trade infrequently. Because of infrequent trading, the market value of these assets has to be estimated between purchase and sale points. This makes real estate a unique asset class and presents several challenges for benchmark builders.

There are two basic classes of indexes for real estate ...

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