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Barriers to growth in the US real estate derivatives market

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dc.contributor.advisor Gloria Schuck. en_US Venter, Jani en_US
dc.contributor.other Massachusetts Institute of Technology. Dept. of Urban Studies and Planning. en_US 2008-09-02T17:49:16Z 2008-09-02T17:49:16Z 2007 en_US 2007 en_US
dc.description Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Dept. of Urban Studies and Planning, 2007. en_US
dc.description This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. en_US
dc.description Includes bibliographical references (leaves 105-106). en_US
dc.description.abstract Commercial real estate is an important asset class but it does not yet have a well-developed derivatives market in the United States. A derivative is a contract that derives its value from an underlying index or asset. Examples of the most well-known derivatives that have been widely used and traded for years are stock options, commodity futures and interest rate swaps. The advent of direct real estate equity derivative products has created the opportunity for similar applications in both the US and international commercial real estate markets. The United States is currently experiencing a convergence between real estate and finance and it appears that the real estate derivatives market might be ready to take off. The use of derivatives could improve the functioning of the real estate industry by allowing investors to gain or reduce exposure to the commercial real estate asset class without directly buying or selling properties. The increased liquidity and reduced up front capital requirements provide added flexibility in executing real estate investment strategies (i.e. speculating) and managing risk (i.e. hedging). This has resulted in significant interest in the development of commercial property derivatives by key players in all sectors. A number of barriers (e.g., indices, pricing, education, fund mandates, tax and accounting treatment) still exist that hinder the successful implementation and growth of real estate derivatives in the US commercial real estate market. It is crucial for the market to overcome these barriers in order to revolutionize the institutional world and allow investors to gain exposure to the real estate asset class and to hedge private real estate risk. This thesis analyzes these barriers to the development of a synthetic market that is on the brink of expanding. en_US
dc.description.abstract (cont.) The US real estate sector is an eight trillion dollar market composed of real estate assets which has been managed until recently without pointed focus on the property specific risk. The size of this market presents a vast opportunity for risk hedging, asset allocation and portfolio rebalancing in a more efficient manner through the use of derivatives. en_US
dc.description.statementofresponsibility by Jani Venter. en_US
dc.format.extent 109 leaves en_US
dc.language.iso eng en_US
dc.publisher Massachusetts Institute of Technology en_US
dc.rights M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. en_US
dc.rights.uri en_US
dc.subject Urban Studies and Planning. en_US
dc.title Barriers to growth in the US real estate derivatives market en_US
dc.type Thesis en_US Real Estate Development en_US
dc.contributor.department Massachusetts Institute of Technology. Dept. of Urban Studies and Planning. en_US
dc.identifier.oclc 226319562 en_US

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