Real estate values are sensitive to the cost and availability of debt capital since of the large amounts of borrowing are required to purchase real estate properties. Real estate is heterogeneous, as no two properties are the same. Direct ownership of real estate properties is management intensive. Other unique characteristics possessed by real estate properties include: fixed location, high unit value, depreciation, high transaction cost, illiquidity, and difficult to value.
(Study Session 13, LOS 38.b) |
