The returns from Real Estate because of capital appreciation is mainly due to the power of compounding. We know that real estate is illiquid as an investment and has high transaction costs. Due to these characteristics, one hardly sells and buys it frequently. As a result, it gains from a reinvestment of funds, which happens by default, whenever you hold an asset consistently, over a long period of time.
To elaborate the power of compounding consider the following example of A grade commercial locations :
This clearly shows the potential that real estate as an asset class commands, to generate long term wealth for the owners.
To elaborate the power of compounding consider the following example of A grade commercial locations :
This clearly shows the potential that real estate as an asset class commands, to generate long term wealth for the owners.
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