Stocks Are from Mars, Real Estate Is from Venus

摘要

In portfolio planning and asset management, nothing is more fundamental than an understanding of the determinants of long-run investment performance across individual assets or types of assets. Explaining the cross-section of expected total return—in other words, the "opportunity cost of capital" or DCF discount rate—is central to any rational approach to strategic or tactical portfolio policy, as well as to the selection of individual assets for purchase or sale. Should investors expect and require a higher ex ante internal rate of return (IRR) for an investment in an apartment or office building, in a larger or smaller property, or in a property in a larger or smaller city?