Why invest in real estate?
Did you know that real estate is the world’s largest asset class? In fact, its total value is higher than the combined value of all listed stocks and bonds. And that value is expected to continue to grow robustly in the coming years.
For many people, buying a house or an apartment is the first big acquisition they ever make. But real estate can be more than just a place to live, it can also be a potentially attractive long-term investment with some rather unique benefits. These include:
The basics
Broadly speaking, real estate investments can be split into two categories: direct and indirect. As the name suggests, direct real estate investing is when investors directly purchase real estate such as office buildings, residential homes, hotels, or development properties with the aim of generating income and capital appreciation.
The indirect approach, on the other hand, involves investing in real estate through instruments such as real estate investment trusts (REITs) or exchange-traded funds (ETFs), open or closed-end equity or debt funds, or real estate club deals, rather than owning actual buildings.
Indirect real estate investments are subject to capital market fluctuations.
Getting started
Each investment type has its own specific benefits, advantages, and risk-return parameters. So before selecting an instrument or strategy, it’s important that you do your research and conduct a thorough assessment of your specific situation, needs, goals, and risk appetite.
Real estate investments can be a potentially attractive way to generate returns and diversify your portfolio but they can also have tax implications, and, like any investment, they entail risks. So before taking the plunge, it can be a good idea to seek the support of a professional who can explain the latest trends in global real estate markets, guide you in selecting your investments, and help ensure that any investment you choose is a good fit with your existing portfolio and overall situation.
Use the guide below to help you plan your next steps. We wish you much success on your real estate journey!
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