The Features of Property As an Investment – Part 2 is one of the best articles about Property Investment. There are numerous posts on the internet that examine Property Investment, The Features of Property As an Investment – Part 2 one of which we suggest for you. Hopefully the articles that people present below can be of use, increase knowledge and be a alternative for you.
For investors to understand property, getting the basics is important. The following is additional features of property as an investment.
1) Lengthy transaction time
The transaction time required to complete a property sale is relatively lengthy. In order to balance the interests of both buyers and sellers, the property transaction process involves several stages from the payment of the deposit to the signing of the sales contract and the completion of the sale. At each stage, certain legal requirements must be fulfilled and this takes time to accomplish, with the result that the traction of an average second-hand private apartment, for example, could require up to twelve weeks before it is completed.
2) Property as an illiquid asset
Property is illiquid, that is, it cannot be converted into cash at short notice. This is a consequence of the length of time needed to complete a transaction. Illiquidity exposes property investment to the risk of market shifts over time, a two-edged sword that can enhance the value of the property as well as diminishing it.
3) Property Management
Property requires management. Because it is a physical asset, neglect and obsolescence can afflict the property. Hence, it is important to manage, maintain and where necessary, renew its physical fabric to retard the onset of obsolescence and enhance its value.
4) Supply inelasticity
Property is generally supply inelastic in the short run. This means that the stock of real estate cannot be readily increased at short notice, since it takes a considerable period to build any type of property. A single two-storey detached house could take, for example, up to one year to complete. A large mixed use commercial property could take, perhaps, four years or more to complete.
5) Imperfection data and information
Looking at real estate in the aggregate, the property market is characterised by data imperfections. Unlike stock and bond markets, where trading takes place in a fixed geographic location, properties are transacted when and where buyers and sellers (or landlords and tenants) agree on a price (or rent) and enter into legally binding contracts, wherever they might be. This lack of a central trading place implies that data on transactions is not disseminated instantaneously or equally to market participants at low cost, as it would be in the case of stocks and shares.
6) Effect of market leaders
The property market is also imperfect in terms of supplier power. In economic terms, it is oligopolistic, that is, there are several large property developers who behave as market leaders, setting benchmarks that others tend to follow. The result is that property prices may not reflect the true supply-demand equation at any one point in time. Prices tend to move quickly upwards but are “sticky” downwards. This, in large part, accounts for the booms and busts of the famous real estate cycle.
7) Government intervention
Land is one of the primary resources of any country. As such the use, development, management and ownership of land and built up properties is often affected by government legislation and policies implemented to ensure their optimal use. While government legislation and policies are inevitable, the degree and extent of intervention depend very much on the type of government and the political climate of the country.
Hence the article with the name of The Features of Property As an Investment – Part 2, that we reveal and is taken from various sources on the internet. You will get more different related articles on the group page Investment in Property.
Real Estate Investment Shrewd Or Foolish? A Contrarian’s View is one of the greatest articles about Property Investment. There are numerous posts on the internet that discuss Property Investment, Real Estate Investment Shrewd Or Foolish? A Contrarian’s View one of which... Read More
6 Tips for Taking Your Real Estate Investing to the Next Level is one of the finest posts about Property Investment. There are lots of articles on the internet that discuss Property Investment, 6 Tips for Taking Your Real Estate Investing... Read More
How to Become a Successful Real Estate Developer is one of the best articles about Property Investment. There are many articles on the web that discuss Property Investment, How to Become a Successful Real Estate Developer one of which we recommend... Read More
How to Buy Belize Real Estate is one of the greatest articles about Property Investment. There are numerous articles on the internet that discuss Property Investment, How to Buy Belize Real Estate one of which we suggest for you. Preferably the... Read More
Koh Samui Investment in Condominiums, Condos and Choices For the Lifestyle Investor is one of the finest articles about Property Investment. There are numerous articles on the internet that discuss Property Investment, Koh Samui Investment in Condominiums, Condos and Choices For... Read More