Defining characteristics of real estate

Factors Unique to real estate

1.   Unlike many other assets, real estate does not provide you minute-to-minute valuations for your holdings

2.   Huge transaction costs – registrations, authority permissions, society charges etc

3.    Reasonably Illiquid investment – extremely important but under considered factor

4.   Every real estate’s price and liquidity is location dependant – even in the same locality e.g. sunlight, neighbors, view etc

5.   Highly tangible- unlike most stocks you can see and touch your property. Creates substantial pride of ownership, but tangibility also has its downside - requires hands-on management. You don't need to clean and maintain bonds and stocks.

6.   During times of calamities (both natural and man made) it is a burdensome asset to own

Nature/ Inherent qualities of Real estate

1.   It is a limited resource – cannot be produced/ manufactured

2.   It is geographically static – cannot be moved to another place

3.   Benefits and returns enjoyed by

  a) the occupant or

  b) the legal owner only

4.   Being a fixed resource , you only add on it and any increment belongs to the land (and therefore its owner)