{"title":"Real Estate Returns","authors":"J. C. Francis, R. Ibbotson","doi":"10.3905/jai.2020.1.111","DOIUrl":null,"url":null,"abstract":"This article compares and contrasts investments in residential, farmland, and commercial real estate. We also compare real estate investments to more traditional investments in stocks, bonds, commodities, and alternative assets. Price-change returns, rental returns, and total returns from 1991 through 2018 are the focus of the analysis. Including rent is important because rent makes up a significant part of the returns. We include empirically derived implicit net rent data from owner-occupied residences and owner-occupied farmland in the analysis. TOPIC: Real estate Key Findings • High Returns. All three real estate categories did well. But farm real estate had the highest average returns, and the average farm price did not dip during the 2008–2009 subprime mortgage crisis. • Riskiest. Commercial real estate was the riskiest category of real estate investment between 2003 and 2019. And it suffered the largest price dip during the subprime mortgage crisis. • Resolving Uncertainty. Because real estate is relatively illiquid, it is difficult to measure the year to year returns precisely. However, our overall returns from rent and price changes are more informative.","PeriodicalId":45142,"journal":{"name":"Journal of Alternative Investments","volume":null,"pages":null},"PeriodicalIF":0.4000,"publicationDate":"2020-08-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Alternative Investments","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.3905/jai.2020.1.111","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q4","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
This article compares and contrasts investments in residential, farmland, and commercial real estate. We also compare real estate investments to more traditional investments in stocks, bonds, commodities, and alternative assets. Price-change returns, rental returns, and total returns from 1991 through 2018 are the focus of the analysis. Including rent is important because rent makes up a significant part of the returns. We include empirically derived implicit net rent data from owner-occupied residences and owner-occupied farmland in the analysis. TOPIC: Real estate Key Findings • High Returns. All three real estate categories did well. But farm real estate had the highest average returns, and the average farm price did not dip during the 2008–2009 subprime mortgage crisis. • Riskiest. Commercial real estate was the riskiest category of real estate investment between 2003 and 2019. And it suffered the largest price dip during the subprime mortgage crisis. • Resolving Uncertainty. Because real estate is relatively illiquid, it is difficult to measure the year to year returns precisely. However, our overall returns from rent and price changes are more informative.
期刊介绍:
The Journal of Alternative Investments (JAI) provides you with cutting-edge research and expert analysis on managing investments in hedge funds, private equity, distressed debt, commodities and futures, energy, funds of funds, and other nontraditional assets. JAI is the official publication of the Chartered Alternative Investment Analyst Association (CAIA®). JAI provides you with challenging ideas and practical tools to: •Profit from the growth of hedge funds and alternatives •Determine the optimal mix of traditional and alternative investments •Measure and track portfolio performance •Manage your alternative investment portfolio with proven risk management practices