In: Finance
Explain why an investor that is held to making regular payouts (like a pension fund, insurance company or endowment) might be drawn more to real estate than any of the other alternative investments listed in the course.
Real Estate is one of the safest investment one can make. It is very rare that the value of real estate goes down. Also there is a natural appreciation in value of real estate because the population is constantly increasing and people need home to live in and offices to carry on their business.
Real Estate fits well with a Pension funds' long term investment plan and it delivers stable cash flows to the portfolio. Investments in Appartments provide a stable rent income. Also these funds always tend to invest in high value sustainable real Estate providing long term benefits.
The other options such as Equity and Fixed income group investments have their drawbacks. Investments in equity is more risky than real estate in the long term. Fixed income group investments are less risky, but the returns are also low.
Thus an investor that is held to making regular payouts might be drawn more to real estate than any of the other alternative investments.