College 1
What is real estate?
➔ Real comes from reality = land and all that has been permanently attached
- Structure: buildings; houses, offices, infrastructure
➔ Estate = what a persons owns
- Estate = realty + personalty
➔ So: real estate is land and things attached to it that a person owns
But usually the term is taken broader: the owner can also be a firm, an insurance
company, a pension fund…
Real estate is what we see around us (a city ‘is’ real estate)
Why is real estate important?
➔ A large part of the capital stock is real estate
• Investments are often investments in real estate
➔ Almost every human activity is facilitated by real estate
• Agriculture: land, farmhouses, barns
• Manufacturing: factories, industrial buildings
• Services: offices, retail
• Civil service, public utilities
• Residential real estate: houses
• Infrastructure should also be considered as real estate
Real estate and macroeconomics
➔ Real estate is an important element of almost every economic crisis
• Either as a driver: the crisis that started in 2007 originated from the US housing/mortgage
market
• Or as a victim: a downturn in economic growth usually hits real estate markets hard
- Investments in durables can often be postponed easily
➔ Real estate can reinforce an economic upswing
• Through the development of new buildings
• And through the impact of higher prices for residential and commercial real estate on
spending on other goods
- Real estate serves as a collateral (onderpand) for mortgage loans
Real estate is costly
- A large part of the capital stock is real estate
- A substantial share of investment concerns real estate
- Real estate development is an important economic activity
• Many parties are involved: investors, designers, construction firms, public authorities
- Think about the cost of constructing a house, an apartment building, an office …
Real estate markets
Are not easy to understand
- The commodity is heterogenous
• location is an important characteristic
- The market is often not transparent
• Real estate agents appear to play an important role
What is real estate?
➔ Real comes from reality = land and all that has been permanently attached
- Structure: buildings; houses, offices, infrastructure
➔ Estate = what a persons owns
- Estate = realty + personalty
➔ So: real estate is land and things attached to it that a person owns
But usually the term is taken broader: the owner can also be a firm, an insurance
company, a pension fund…
Real estate is what we see around us (a city ‘is’ real estate)
Why is real estate important?
➔ A large part of the capital stock is real estate
• Investments are often investments in real estate
➔ Almost every human activity is facilitated by real estate
• Agriculture: land, farmhouses, barns
• Manufacturing: factories, industrial buildings
• Services: offices, retail
• Civil service, public utilities
• Residential real estate: houses
• Infrastructure should also be considered as real estate
Real estate and macroeconomics
➔ Real estate is an important element of almost every economic crisis
• Either as a driver: the crisis that started in 2007 originated from the US housing/mortgage
market
• Or as a victim: a downturn in economic growth usually hits real estate markets hard
- Investments in durables can often be postponed easily
➔ Real estate can reinforce an economic upswing
• Through the development of new buildings
• And through the impact of higher prices for residential and commercial real estate on
spending on other goods
- Real estate serves as a collateral (onderpand) for mortgage loans
Real estate is costly
- A large part of the capital stock is real estate
- A substantial share of investment concerns real estate
- Real estate development is an important economic activity
• Many parties are involved: investors, designers, construction firms, public authorities
- Think about the cost of constructing a house, an apartment building, an office …
Real estate markets
Are not easy to understand
- The commodity is heterogenous
• location is an important characteristic
- The market is often not transparent
• Real estate agents appear to play an important role
