Introduction – The real estate sector is one of the most globally recognized sectors. It comprises of four sub-sectors – housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodation.
The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. In India, the real estate sector is the second-highest employment generator, after the agriculture sector. It is also expected that this sector will incur more non-resident Indian (NRI) investment, both in the short term and the long term.
Bengaluru is expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.
- 1 What is real estate sector in India?
- 2 Is that real estate come under service sector in India?
- 3 What are the 5 main categories of real estate?
- 4 Is real estate part of tertiary sector?
- 5 What is tertiary sector also known as?
- 6 What are the 7 major types of properties?
- 7 What are the 3 most important factors in real estate?
- 8 What are the 4 main types of industries?
- 9 What does subtype mean in real estate?
What are the sub industries of real estate?
The main segments of the real estate sector are residential real estate, commercial real estate, and industrial real estate.
What type of sector is real estate?
The tertiary sector is the third of the three economic sectors of the three-sector theory. It comprises all the services within an economy. Real Estate comes under Tertiary Sector.
What is real estate sector in India?
Increasing Investments – * In the first-half of 2021, India registered investments worth US$ 2.4 billion into real estate assets, a growth of 52% YoY. * Construction is the third-largest sector in terms of FDI inflow. FDI in the sector (including construction development & activities) stood at US$ 54.17 billion from April 2000 to March 2022. In India, the real estate sector is the second-highest employment generator, after the agriculture sector. Real estate sector in India is expected to reach US$ 1 trillion in market size by 2030, up from US$ 200 billion in 2021. By 2025, it will contribute 13% to country’s GDP. Emergence of nuclear families, rapid urbanisation and rising household income are likely to remain the key drivers for growth in all spheres of real estate, including residential, commercial, and retail. Rapid urbanisation in the country is pushing the growth of real estate. >70-75% of India’s GDP will be contributed by urban areas by 2020. Around 40 million square feet were delivered in India in 2021. It is expected that the country will have a 40% market share in the next 2-3 years. India is expected to deliver 46 million square feet in 2022. As per ICRA estimates, Indian firms are expected to raise >Rs.3.5 trillion (US$ 48 billion) through infrastructure and real estate investment trusts in 2022, as compared with raised funds worth US$ 29 billion to date. India’s real estate sector saw over 1,700 acres of land deals in the top 7 cities in 1 year. Foreign investments in the commercial real estate sector were at US$ 10.3 billion between 2017-21. As of February 2022, Developers expect demand for office spaces in SEZs to shoot up after the replacement of the existing SEZs act. Private market investor, Blackstone, which has significantly invested in the Indian real estate sector (worth Rs.3.8 lakh crore (US$ 50 billion), is seeking to invest an additional Rs.1.7 lakh crore (US$ 22 billion) by 2030. India’s Global Real Estate Transparency Index ranking improved by five notches from 39 to 34 since the past six years from 2014 until 2020 on the back of regulatory reforms, better market data and green initiatives, according to property consultant JLL. According to Savills India, real estate demand for data centres is expected to increase by 15-18 million sq. ft. by 2025. The institutional investments in the Indian real estate sector are expected to increase by 4% to reach Rs.36,500 crore (US$ 5 billion) in 2021, driven by rising interest of investors towards capturing attractive valuations amid the pandemic. Between January 2021 and September 2021, private equity investment inflows into the real estate sector in India stood at US$ 3.3 billion. In the first quarter of 2022, the gross leasing volume of India’s top seven office markets was at 11.55 million sq. ft. The office market in top eight cities recorded transactions of 22.2 msf from July 2020-December 2020, whereas new completions were recorded at 17.2 msf in the same period. In terms of share of sectoral occupiers, Information Technology (IT/ITeS) sector dominated with a 41% share in second half of 2020, followed by BSFI and Manufacturing sectors with 16% each, while Other Services and Co-working sectors recorded 17% and 10%, respectively. The office space leasing activity is expected to pick up in 2021 and is likely to be at par with the 10-year average, i.e., 30-31 million sq. ft. Of the total PE investments in real estate in Q4 FY21, the office segment attracted 71% share, followed by retail at 15% and residential and warehousing with 7% each. Demand for residential real estate revived in Q4 FY21 as homebuyers took advantage of low mortgage rates and incentives rendered by developers. Residential sales in this quarter recovered to >90% volumes recorded in 2020 across the top seven cities. In FY21, the top seven listed real estate companies collectively sold 32.61 million sq. ft. of residential space, up 7% from FY20. Within the next two years, these seven companies plan to launch ~92.5 million sq. ft. of additional residential space. Home sales volume across seven major cities in India surged 113% YoY to reach ~62,800 units in the third quarter 2021, from 29,520 units in the same period last year, signifying healthy recovery post the strict lockdown imposed in the second quarter due to the spread of COVID-19 in the country. According to the Economic Times Housing Finance Summit, about 3 houses are built per 1,000 people per year compared with the required construction rate of five houses per 1,000 population. The current shortage of housing in urban areas is estimated to be ~10 million units. An additional 25 million units of affordable housing are required by 2030 to meet the growth in the country’s urban population. The Government of India has been supportive towards the real estate sector. In August 2015, the Union Cabinet approved 100 Smart City Projects in India. The Government has also raised FDI (Foreign Direct Investment) limits for townships and settlements development projects to 100%. Real estate projects within Special Economic Zones (SEZ) are also permitted for 100% FDI. Construction is the third-largest sector in terms of FDI inflow. Construction is the third-largest sector in terms of FDI inflow. FDI in the sector (including construction development & activities) stood at US$ 54.86 billion from April 2000-June 2022. Exports from SEZs reached Rs.7.96 lakh crore (US$ 113.0 billion) in FY20 and grew ~13.6% from Rs.7.1 lakh crore (US$ 100.3 billion) in FY19. Indian real estate is expected to attract a substantial amount of FDI in the next two years with US$ 8 billion capital infusion by FY22. As of June 30, 2021, India formally approved 427 SEZs. In the first-half of 2021, India registered investments worth US$ 2.4 billion into real estate assets, a growth of 52% YoY. Share of the top listed developers in the Indian residential market is expected to increase to 29% in FY24, from 25% in FY21, driven by a strong pipeline for residential project launch. Between July 2021-September 2021, a total of 55,907 new housing units were sold in the eight micro markets in India (59% YoY growth). Between July 2021-September 2021, housing sales in the NCR surged 97% to reach 10,220 units compared with the same period last year. In the third quarter of 2021 (between July 2021-September 2021), new housing supply stood at ~65,211 units, increased by 228% YoY across the top eight cities compared with ~19,865 units launched in the third quarter of 2020. In 2021-22, the commercial space is expected to record increasing investments. For instance, in October 2021, Chintels Group announced to invest Rs.400 crore (US$ 53.47 million) to build a new commercial project in Gurugram, covering a 9.28 lakh square feet area. Government of India’s Housing for All initiative is expected to bring US$ 1.3 trillion investments in the housing sector by 2025. As of December 2019, under Pradhan Mantri Awas Yojana (Urban), 1.12 crore houses were sanctioned in urban areas, with a potential to create 1.20 crore jobs. The scheme is expected to push affordable housing and construction in the country and give a boost to the real estate sector. On July 09, 2020, Union Cabinet approved the development of Affordable Rental Housing Complexes (AHRCs) for urban migrants and poor as a sub-scheme under PMAY–U. In October 2021, the RBI announced to keep benchmark interest rate unchanged at 4%, giving a major boost to the real estate sector in the country. The low home loan interest rates regime is expected to drive the housing demand and increase sales by 35-40% in the festive season in 2021. Government has also released draft guidelines for investment by Real Estate Investment Trusts (REITs) in non-residential segment. The Ministry of Housing and Urban Affairs has recommended all the states to consider reducing stamp duty of property transactions in a bid to push real estate activity, generate more revenue and aid economic growth. In July 2021, the Securities and Exchange Board of India lowered the minimum application value for Real Estate Investment Trusts from Rs.50,000 to Rs.10,000-15,000 to make the market more accessible to small and retail investors.
Is that real estate come under service sector in India?
Introduction – The reforms of the 1990s have been associated with the expansion of the service sector in India. Midway through the 1980s, the service sector began to expand, but it really took off in the 1990s when India started a series of economic reforms in response to a serious balance of payments issue.
- The services sector is not only the dominant sector in India’s GDP, but has also attracted significant foreign investment, has contributed significantly to export and has provided large-scale employment.
- India’s services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with construction.
In order to enhance India’s commercial services exports share in the global services market from 3.3% and permit a multi-fold expansion in the GDP, the government is also making significant efforts in this direction. India is a unique emerging market in the globe due to its unique skills and competitive advantage created by knowledge-based services.
What are the 5 main categories of real estate?
Key Takeaways –
Real estate is considered real property that includes land and anything permanently attached to it or built on it, whether natural or man-made.There are five main categories of real estate which include residential, commercial, industrial, raw land, and special use.Investing in real estate includes purchasing a home, rental property, or land.Indirect investment in real estate can be made via REITs or through pooled real estate investment.
Is real estate part of tertiary sector?
Définition – The tertiary sector covers a wide range of activities from commerce to administration, transport, financial and real estate activities, business and personal services, education, health and social work. It is made of:
the market services sector (trade, transports, financial operations, business services, personal services, accommodation and food service activities, real estate, information-communication);the non-market sector (public administration, education, human health, social work activities).
The perimeter of the tertiary sector is therefore defined by complementarity with agricultural and industrial activities (the primary and secondary sectors).
What are the four sectors of real estate?
Introduction. The real estate sector is one of the most globally recognized sectors. It comprises of four sub-sectors – housing, retail, hospitality, and commercial.
How many categories are in real estate?
Four Major Types Of Real Estate Properties In India Real estate investment is one of the most proven ways of wealth generation all around the world. The great thing about putting your money into a property is that you need not wait for the right time to reap profit as you have always the choice of renting it out.
- Most newbies in this field know how to generate active and passive income from their property investment.
- What they don’t know is how many exist.
- Experts suggest that each type of real estate investment has its potential benefits and pitfalls.
- So, there is no safest or most beneficial avenue for investment, it all depends on the market situation.
Let’s know about the different types of real estate investments.1) Residential Real Estate Apartments, single-family houses, multi-family homes, villas, townships, and condos all come under this category. Each of these options presents different prospects from an investment point of view.
For example, the prices of well-built villas and independent houses increase over time because of the rising value of land and longevity of the building. But contrary to this, the price of apartments might not witness quality appreciation after 10-15 years of use. Thus, they need to be sold within the next five to 7 years.2) Commercial Real Estate Shopping centres, restaurants, schools, hospitals, and office spaces all are some examples of commercial properties that we’re probably familiar with.
Investing in them is more expensive as compared to residential properties, but the chances of profit generation are better too. However, if you are a newbie investor, it might be difficult to choose the right property for investment. And, to remain safe, you must seek the guidance of a real estate investor.
- Arranging for a down payment is another area of concern in this type of investment because most Indian banks provide about 50% to 70% of the cost as loan.
- Also, unlike a housing loan, one taken for a commercial investment requires a mortgage.3) Industrial Real Estate Buildings and factories used for manufacturing goods and warehousing are known as industrial properties.
They are generally located far-away from the city to avoid the citizens getting affected by their pollutants. Investing in these properties might be a tricky affair as it’s difficult to estimate the capital investment. Although the property might be recently converted from agricultural land to an industrial establishment, its price will be far more than the nearby farmlands.
- Renting an industrial unit might also be difficult as the tenant’s needs might change very frequently.
- Abiding by the laws and orders that have been imposed on industrial establishments in India is another area of concern.4) Investing in Land This is one of the least expensive and most secure,
- When you buy a piece of land for investment, you need not worry about theft, damage, and maintenance, which is off course great.
But at the same time, generating passive income from investment in land requires some out-of-the-box ideas, which might not work necessarily. However, still, it’s good to invest in it because it could pay off handsomely in the future. However, there is a disadvantage to it as well i.e., loans will be charged at more interest rates than a home loan.
- Moreover, you won’t be saving any taxes on repayment of the principal amount.
- Conclusion: – All types of real estate investment have some advantages and disadvantages.
- So, we cannot say which one is the best.
- But if you want to succeed as a real estate investor, you’ll need to analyse your financial situation and the prospects of growth of the property you are looking to invest in.
Moreover, plan how you will be using the property in both the long run and short run. : Four Major Types Of Real Estate Properties In India
Who is the biggest real estate in India?
DLF Ltd. is the largest real estate developer in India, with more than 73 years of experience in the realty sector.
Is real estate sector a service sector?
Real estate, ownership of dwellings and business services are the biggest contributor to growth among the various sub-sectors in the services sector.
Is real estate in the service sector?
Think about some of the best people or businesses you have worked with in the past. Without even knowing it, they probably excelled at customer service. When most people think about the real estate business, customer service isn’t something that immediately comes to mind.
- However, it is much more important than you think.
- There are a few real estate customer service tips that everyone should know about.
- With all of the competition out there, you need to separate yourself from the pack.
- One of the ways to do this is by delivering excellent customer service every day.
- This should be done not only on the deals you are part of but ones that elude you as well.
What is excellent customer service in the real estate world? Here are five examples.
Responsiveness. One of the biggest pet peeves in the real estate industry is with a lack of responsiveness. There is no excuse not to return a call, text, or email in a timely fashion. In this day and age of increased technology, you should be able to get back to someone in a few hours. Anything less is a sign that you are either too busy, too unorganized, or you don’t care enough about the person to return their call. Neither one of these is very good for your reputation. The average length of a return call is typically less than 60 seconds. Regardless of who you are, you can find 45 seconds to answer a quick question or put someone at ease. Even if you don’t know the answer, you should let everyone know. The worst thing you can do is to keep your buyer, seller, attorney, business partner, mortgage broker or fellow investor in the dark. Make a habit to return any communication as quickly as possible.
Honesty. Are you trustworthy? Do you do what you say you are going to? Are you willing to blur the lines of ethics on a given deal? People in business often put a premium on how honest you are rather than how well you can get things done. No deal is worth going to jail over or ruining your reputation. By trying to squeeze a few extra thousand dollars on a deal you can do much more harm than good. It may sound cliché but your word is your bond. If you are not trustworthy and honest on a deal, there is very little chance anyone involved will want to work with you in the future. It is important to take a few extra minutes before you get too far into a deal and commit to something you aren’t comfortable with. Once you put your word to something, you are going to be held to it. The more honest and forthright you are, the greater the chance someone will want to work with you in the future.
Reliability. Nobody wants to hear about how much business you close. They would rather work with someone who under promises and over delivers. If you boast to a fellow investor that you have twenty leads a month, you better be able to back that up. People like to know what they are getting when they work with someone. If you say you are going to be somewhere, you had better show. If you prove to be unreliable, there are several other investors in your area to turn to. This doesn’t mean you have to make an offer on every property you see, but once you commit, you need to back it up. There are several investors and real estate agents who are skeptical working with a new investor. The best way to put them at ease is by being as reliable and consistent as possible. This won’t happen overnight. It will take a series of small events to slowly build up trust. Once you prove reliable and trustworthy, you will slowly find yourself with more deals.
Follow up. A large part of customer service is staying in touch with your customers. In the real estate world, your customers are often your business partners. Every real estate agent, attorney, mortgage broker, wholesaler and fellow investor should be treated as a business partner. This means staying on top of the relationship and finding time to reach out to them. Every time a new lead comes your way, you should stay in constant contact with your lead source. Even if it doesn’t close, you should be thankful that they thought of you. From there, every few weeks you should give them a call, email, text, or stop by their office. By following up, you stay on their mind if and when they get their next deal. If you ignore them and don’t follow up you can’t expect any business in the future.
Consistency. People like to work with people they want to be around. You should try to remain even keel regardless of the situation. If you come into a meeting screaming and yelling one day and pleasant the next people won’t know who they are getting. Everyone has days that are better than others but your mood can’t reflect it. Nobody should be intimidated to call you if they have a question. If they feel you are going to jump down their throat they will find someone else to work with. Consistency is key in everything you do in business. By being too much of a risk factor to work with you will lose the faith of the people around you.
How you interact and communication with the people in your network is important in growing your business. Every phone call you make or email you send is being judged by someone. Always focus on customer service with everything you do. It is that important.
What is tertiary sector also known as?
Understanding the Tertiary Industry – The tertiary industry is split into two main categories. The first is made up of companies in the business of making money, such as those in the financial industry. The second comprises the nonprofit segment, which includes services such as state education.
- The tertiary industry sector makes up the vast majority of employment opportunities and is solely focused on providing services, not goods, to consumers and other organizations.
- For this reason, it is also known as the service sector,
- This is in contrast to the primary industry, which produces raw materials, and the secondary industry, which takes raw materials and uses them to produce salable consumer goods,
The term tertiary industry can be used to describe a single service-oriented organization or the industry segment as a whole.
What are the 3 types of real estate?
Key Takeaways –
There are three main types of real estate properties: vacant land, residential properties, and commercial properties.Vacant land allows you the opportunity to either build something or lease it out.Residential properties usually consist of single- or multi-family houses, both of which you could own and rent out for a profit.Commercial properties consist of both land and buildings, usually used for businesses and office space.
What are the three pillars of real estate?
The Three Pillars of Real Estate Investing: #1 – Location –
- After three decades of investing I have come up with a definition that I apply to everything I buy. It is an absolutely unbreakable principle as far as I am concerned
- Romance within about a ten to fifteen mile radius of a major metropolitan area.”
- Greg Pinneo, Wisdom for Wealth
Greg has three core principles for purchasing investment real estate. He calls them the three pillars. At one time he would have his real estate students at Seattle Pacific University stand up on their desk, just like in and yelp at the top of their lungs: “Oh Captain my Captain.
- Close to a major metropolitan (job) center.
Being near a job center, part 2, is easier to explain. Our tenants and our end-buyers must have steady jobs in order to rent or to buy our houses. Jobs and job growth are one fundamental of a healthy real estate market. High-paid, professional jobs are the driver of stable or growing prices in a real estate market.
- Pay attention to that in your area.
- But romance? What’s that have to do with real estate? Greg explains that romance is what we can’t live without.
- Romance is the emotional pull that a location and a house have on potential renters and buyers.
- Romance makes your properties easy to rent or sell.
- Romance is not a house right next to a landfill.
Romance is not an apartment on a 4-lane highway. Romance in an urban area might be a charming bungalow on a side street within walking distance of a park and a coffee shop. In suburban areas, romance may be a safe subdivision with established trees and landscaping, well cared for single family houses, in a desirable school district.
What are the 7 major types of properties?
What Are The Different Types Of Real Estate Investors large and small soon learn there are, including residential, office, industrial-warehouse, hospitality, retail, agricultural and the remainder, catch-all category of “special.” Evolving to meet the needs and wants of man, these separate have emerged largely through market forces, although in the modern era often government rules and zoning affects the actual location and scale of property development.
- Urban scholars know some real estate patterns manifest again and again through history, such as the concentration of housing and services near city cores, which necessarily tends to push manufacturing and farming further out along urban perimeters.
- Indeed, visitors to the preserved ruins of Pompeii, circa 79 AD, will recognize “fast food” stalls along urban roads—vendors who served hot stews from cauldrons—while fields and pottery factories were located outside the denser city warrens.
The general locations of great metropolises also remain largely a constant though the ages. Even in the jet age, the huge urban areas are almost always on the ocean or on major rivers, endowed with ports and transportation hubs. For the citizen and investor, property is timeless, and while a few great cities have declined or perished, most great metropolitan regions have persisted through millennia.
Even in the New World the great cities have deep roots; for example New York City, then New Amsterdam was settled in 1642, while London was founded by Roman occupiers in 42 AD, exactly 1,600 years earlier. Thus, well-chosen properties have been rewarding property owners and residents alike and will almost certainly do so beyond the lifespans of any present owners and even their descendants.
Sign up for our educational newsletter and to gain early access to our next investment opportunity. For investors seeking security, income and appreciation there is little that can compete with well-selected real estate. To be sure, there is risk in every venture, every business and in every property investment.
- For those completely risk-averse seeking income, there are the sovereign bonds of great nations, such as Germany or the US—although returns are often low, or even below the rate of inflation.
- Bonds of lesser rank, such corporate bonds graded by a credit-rating agency, can offer higher yields, but with also greater risks.
- And for those seeking for large and rapid appreciation, Wall Street or the private equity markets offer a variety of opportunities, with many putative reward-profiles but also with risks—risks that include total loss (or even negative returns, for those inclined to play certain options or other derivatives markets).
- So, for investors looking for the best real-world mix of security, appreciation and income, there are,
In recent times, the seven types of property have opened up to investors of all ranks, through convenient and low-cost platforms such as, or publicly traded real-estate companies, or offerings. No longer is the individual investor limited to a single-family house, a small apartment building, or a stretch of ranch land.
- There is another excellent reason to invest in property: While true geniuses, such as a Steve Jobs or Elon Musk might rarely create a tech empire, many great real estate fortunes have been built through diligent and sustained effort by steady, dedicated investors.
- So, it behooves the investing public to know a little more about,
Historically speaking, office districts are a relatively new phenomenon, postdating agriculture, industrial, retail and residential uses, for example. Today, of course, downtown high-rise central business districts are iconic of modern commerce, in the US and globally.
- Property investors, particularly institutional, have seized the skyrises, which can command desirable credit-worthy blue-chip and other high-end tenants.
- Interestingly, the concept of the modern office district was jump-started after the Great Chicago Fire of 1871 leveled much of the city.
- Newer buildings were built better, higher and to code, and one tower begat another, so soon the office district was born.
There are many ways to slice every property sector, but in general modern office buildings are thought of terms of central business district vs. suburban, and then also class A, B, or C. In more recent years, such sub-categories as “mixed-use”—usually including ground-floor retail, and “creative” and “shared-space” office types have emerged.
Creative office buildings are often re-purposed warehouses, or other older structures, and shared-space office buildings often include a broader mix of “curated” retail and service tenants, in an attempt to create a more-desirable building habitat for all tenants. In terms of class, as one might expect, class A refers to premier, featuring highest-quality construction, fit and finish standards, and best technologies and building amenities.
Institutional investors often buy such large structures as part of their “core” portfolios., generally speaking, are outside premier central business districts, or may be older properties. For investors, class B properties can be attractive for the price point, but also because some older buildings have architectural charm, and with upgrades and amenitizing, can regain admittance to the class A strata, and the higher rents attached thereto.
- Class C offices are generally useful, but work-a-day structures outside better central business district or prime suburban submarket locations, and often inhabited by smaller accounting or law firms, public-relations shops and the like.
- Perhaps the second-oldest kind of real estate after agricultural, residential is still largely an owner-user or smaller-investor market, though in recent decades even single-family detached homes, and certainly the, have become increasingly popular among institutional investors.
Just as with office buildings, investors have sliced and diced the multifamily or apartment sector, in this case into three large categories, denoted as high-rise, mid-rise and garden. In apartment-land, high-rise refers to 10-story structures and above, which are usually upper-class bastions from the get-go, due to the,
Once buildings get above five stories generally steel construction rather than wood becomes the norm, along with other attendant higher embedded costs such as elevators and larger stairwells, and even commodious underground parking garages. The mid-rise apartments generally fall between five and nine floors, and have elevators, but often still resort to parking lots to accommodate vehicles, if built in suburban locations.
And garden apartments are the workhorses of the industry, usually two- and three-story buildings without elevators, found in both suburban and urban locations. As with office markets, in recent years there has been more fluidity in multifamily markets, with the conversion of warehouses or even old office buildings into living quarters becoming common.
- In more cities, the “mixed-use” property type is being encouraged, which generally features ground-floor retail uses, with housing atop, though sometimes middle layers of offices or hotel suites are included.
- In addition, in latter years many shopping malls have been prospected for at least partial conversion to housing.
- F rom the perspective of institutional investing, one large change in recent years has been the heavy flux of large-scale buyers into the single-family detached home market.
- Such institutional investors as Tricon Residential, American Homes 4 Rent, and Brookfield have moved into buying thousands of single-family detached homes for income and appreciation potentials.
- The granddaddy and biggest player in the single-family detached home market is the Invitation Homes, a Big Board-listed real estate investment Trust (REIT) which owns more than 80,000 houses and adds quarterly to its portfolio.
- The apparition of colossal buyers in the single-family home markets in the new millennium has raised some concerns, but for individual investors, or those participating in residential crowdfunding or syndications, there is a degree of confirmation when the large institutional investors are also in the game.
- If Wall Street, with its vast tribe of analysts and bean-counters thinks housing is a smart investment, then that is probably as good a bet as any.
Of course, even before venturing into single-family homes, Wall Street, syndicators and institutional investors were deep into multifamily investments. Large multifamily investors, such as the publicly held REIT and Tennessee-based MAA, can own more 100,000 apartments, and are also accumulating portfolio properties with each passing year.
- There are yet other subcategories of housing, including condominiums and their cousins, the co-ops, and planned communities (especially for senior citizens), and even manufactured homes.
- In the US, the overarching story on housing is that due to property zoning and other restrictions, new supply has long been curtailed, especially since the Global Financial Crisis of 2008.
- This trend towards housing shortages is global, and seems to inevitably result from increasing urbanization, and the attendant nature of homeowners and other groups to seek greater control over neighborhood development—and not the least, to limit new competition.
In such environments, even manufactured housing developments, once considered somewhat déclassé, have become an investable option in the 2000s. The quality of manufactured homes has risen in recent decades, and, moreover, while usually the residents of manufactured homes do not own the land—they rent a parcel—they do own their fabricated house, and thus tend to be a cut above ordinary apartment renters.
- Manufactured homes is a deceptively large market, housing 22 million US residents.
- Some experts regard manufactured housing as an evergreen market, doing well in good times, but also faring well enough in bad times as homeowners gravitate to more-economical options.
- Moreover, America’s rapidly growing senior population is comfortable in the mobile-home parks.
Thus housing, one of the oldest types of property investments, has been renewed in the 21st century, though it truly never fell out of style. As long as people need shelter, there will be a market for housing. Once a plebeian property class, and often an after-thought among investors, in recent decades the has become a hot ticket due to globalization and the shipping needs of present-day urban megalopolises.
The earliest warehouses were but granaries, kept near or on farmlands, or alongside houses and taverns in villages. Modern-era warehousing began with European transoceanic shipping from the 15th through the 19th centuries, which soon required storerooms along ports to hold goods for payment, or until inland transportation could be arranged.
Ship berths were best used to quickly load or unload cargo, meaning nearby warehouses were a must. Canals and railroads followed, along with growing city populations. The age of mass manufacturing in the 1900s, giving rise to entire warehouse districts near any urban conglomeration.
- The advent of the internet and online consumer purchasing in recent years, as well as increasingly sophisticated manufacturing supply chains, has resulted in such tech-wonders as automated warehouses with ceiling heights above 15 meters, at least 12 meters between spans, and climate control.
- The term “logistics” has come to define large parts of the warehouse scene, and the need for advanced warehouse designs with goods traced through bar codes or even embedded tracking devices.
- As with other property sectors, investors have created classes of warehouses, from A+, A, B+, B, C and D.
As might be suspected, A+ are newest and largest warehouses, on single floors with high ceilings, and latest technology to move and track goods. Large warehouses are also prized among investors for generally being leased to long-term and stable tenants.
- Interestingly, in recent times even the lower grades of warehouses have had a renaissance of investor demand.
- Some industry denizens advise that older warehouses be avoided, since e-commerce or other retailers are gravitating towards sophisticated robotic systems embedded on very large footprints, typically above 400,000 square feet, and even topping 1 million square feet for some owners, such as WalMart.
Amazon’s biggest warehouse is in Tennessee and has 3.6 million square feet. But many older and smaller warehouses are “close in” to urban areas, and with some upgrading are becoming useful for the “last mile” of delivery. Additionally, warehouses in many regions are being converted into creative office space or even “artist loft” living quarters.
As has proven the case for centuries, for investors willing to adapt property to evolving commercial and urban landscapes, there are For as long as man has traveled, there has been a need for temporary housing, first provided along the trade routes or near religious sanctuaries of yesteryear, and still a vibrant market today in every major city.
Through cataclysmic ups and downs, hotels have proven to be no fly-by-night industry: The Nishiyama Onsen Keiunkan, a Japanese resort not far from Mount Fuji, has been in business since the year 705, and is considered the oldest operating hotel in the world.
Today investors tend to classify hotels as luxury or full-service, limited service, flagged vs. unflagged (that is, part of a name-brand chain or not), boutique (generally, a higher-end or unique facility) or extended stay (usually for business travelers on assignment). In addition, resort-, destination- or casino-hotels are included in this category by some investors.
For most, owning an entire hotel is likely too big a bite to chew, but other options include, As with many other types of real estate today, often feature a single property and a value-adding strategy, with an exit planned in five years. Thus, the sponsors might acquire an older hotel, renovate, and reposition the facility to boost operating income—often through a snazzy restaurant and bar scene—and then sell at a good profit while generating reasonable annual income for the limited partners.
- Not surprisingly, hotels tend to thrive in strong economies, and struggle in recessions, dependent as they are on business travelers and consumers with discretionary income.
- Investors may wish to time their purchases of hotel properties with economic downturns.
- That said, the great hotels and modern-era hotel chains have survived through decades of thick and thin, and as global real incomes rise, so does travel and the need for lodging.
New technologies may facilitate virtual meetings, but vacations and real business meetings will never go out of style. As with many of the other property types, it was the emergence of great cities and the attendant specialization of crafts-workers and concentrations of people that led to retail-specific property types.
The earliest retail “properties” were likely food vendors along roadsides, and weekly bazaars at an agreed upon plot of land not far from villagers, where goods could be bartered. Interestingly enough, the first US shopping mall was not in a Chicago or New York City but was the Country Club Plaza on the outskirt of Kansas City, Mo., opened in 1922.
Larger mega-malls became common in the US in the 1980s, and of course, many behemoth shopping-emporiums have struggled in the new millennium with the rapid growth of online shopping. In addition to malls, the retail category includes strip malls, also sometimes dubbed “mini-malls,” those being smaller clusters of retailers usually on one, or possibly two floors.
- Like other property types, in recent decades investors have been innovating and blending more uses with retail properties, the mixed-use format is now common, featuring ground-floor retail, and offices and then housing above.
- And like other properties, retail locations can be re-purposed and converted into housing or other uses, especially if purchased in a down market.
- Some investors specialize in upgrading retail properties, as in converting aging goods-selling shops into higher-end restaurant-bars, or other consumer services, such as veterinarians, salon-operators, or dentists.
- Like other, and are more-stable in paying rents.
- While some smaller retail locations might be suitable for individual investors who seek a hands-on management option, participation with experienced owner-operators through a retail-property syndication might make more sense for most.
- As with so many other property types, in retail the race may not go to the swift, but the adaptable.
- Farmland and ranch lands are the oldest type of real estate, and since people have never stopped eating, such investments have never really gone out of style either.
- There are more than 900 million acres of farmland in the US, roughly three-fifths held by owner-operators, and the rest by landlords who usually rent out fields.
- The prospect of owning land to rent is one that can appeal to investors who do not have the inclination or time to be owner-operators.
- Other investors will find farm crowdfunders and syndicators able to connect them to a market that has endured through the ages.
- There are long track records on US farmlands, and indicate about 6% annual appreciation in property values over recent decades, while generating income along the way.
While every industry has ups and down, in general farmland offers stable values due to the steady demand for product. For income and security, farmland is hard to top.
- In general, investors cluster under the catch-all special category, including theatre, parking, religious, recreational, and medical facilities.
- Occasionally the commerce or customs of man yield up a new property type that does not quite fit into the broad categories generally in use, and so it is with data centers.
- Not quite warehousing, not quite manufacturing, but not really offices either, data centers have become a popular investment, in particular for private equity investors, and certain REITS.
- With the ubiquity of the internet demanding ever-more powerful processing equipment, the globe’s computing infrastructure has shifted from traditional on-site processors to huge data centers and virtual networks that serve hundreds of customers through the cloud.
- There are still-yet other specialty, such as telecom towers, and there are sure to be more in the future as the needs of commerce evolve.
As real estate historians know, the business of owning and managing property is one of the oldest commercial endeavors of man, reaching back into antiquity and founding of the first cities. The broad types of property, such as agricultural, residential, retailing, or warehousing, evolved as metropolises expanded and commerce demanded special property types. Chris Rising manages the day-to-day business activities of Rising, while also serving on its Investment Committee. He received his J.D. Law, Real Estate from Loyola Law School and his B.A. in History and Political Science from Duke University. : What Are The Different Types Of Real Estate
What are the 3 most important factors in real estate?
If you have been involved in real estate for any length of time, you’ve heard it said that the three most important things when it comes to real estate are “location, location, location.” I’ve heard nationally-recognized experts say that over and over on national media.
- I must politely but emphatically disagree.
- I believe the three most important things when it comes to real estate are “location, timing, and circumstances,” and here’s why.
- Just yesterday I drove past a location that I have been driving past for 40 years.
- Yes, 40 years.
- That location has not moved one wit on any GPS or map.
Now, all these years later, massive construction is taking place in that spot. Why is this of interest? Because just a couple years ago, I was part of a group of investors who held an option for a year to buy that property. I was searching for a developer to bring in to put a truck stop there.
- Well, I was about two years too soon, because that is what is going in there now.
- Regrettably, my business colleagues and I do not have any piece of that action.
- What changed? Timing and circumstances changed.
- For 40 years, it was vacant, overgrown, unfarmed farmland sitting at a freeway interchange in northeast Ohio.
The location never changed, but the timing and circumstances changed significantly. One of the changed circumstances is that the other truck stop at that location is doing exceedingly above what was projected. They often have a line of cars and trucks waiting to get into it.
- Because of where it is geographically located, it is the first place for drivers to get gas that is more affordable after having driven at least 100 or more miles coming from Buffalo, New York and heading toward Cleveland, Ohio.
- While location is a key factor, it took timing and circumstances (i.e.
a growing, booming economy and the need for more services for people traveling on the interstate) to make it feasible to develop the property. That property had been for sale for at least 10 years before the team in which I was involved got an option to buy it.
Here’s another example. As a young child growing up in Colorado, there was a mega mall called Cinderella City that was a destination everyone looked forward to visiting. In the 40+ years since leaving Colorado, I’ve learned that Cinderella City became a struggling, declining mall that was eventually bulldozed to make way for low-income housing at that site.
Once again, the location did not change, but timing and circumstances did. What makes circumstances so important is that it includes demographics and economics. There is no better place than Florida to demonstrate how timing and circumstances can change the value of a location.
What are the four sectors of real estate?
Introduction. The real estate sector is one of the most globally recognized sectors. It comprises of four sub-sectors – housing, retail, hospitality, and commercial.
What are the 4 main types of industries?
In economics, industries are generally classified as primary, secondary, tertiary, and quaternary ; secondary industries are further classified as heavy and light.
What does subtype mean in real estate?
Property Sub Type – Q: How do I correctly determine the Property Sub Type for my listed property? A: The Property Sub Type describes what is being offered for sale. It is the statement indicating what type of property the buyer will own upon close of escrow.
- It is typically the word a buyer or seller that is not a real estate professional would use to describe the type of property.
- This is the description that buyer agents rely upon to determine the properties that meet their particular buyers’ requests.
- Under the concepts of broker cooperation, listing agents have a duty to properly categorize the Property Subtype so that buyer agents are not tricked into showing a Property Subtype that fails to meet their buyers’ specific instructions.
This is also the description that will be sent out to syndication and IDX websites.