Property, Common Stock, and Property Shares
- Published in The Journal of Portfolio Management
Property shares are here to stay, although the debate regarding their true property nature continues. The fact that property companies are nearly fully invested in real estate should result in a high correlation between their returns and the development of the underlying property markets. Their low-cost and liquid trading mechanism differs substantially from practices in the unsecuritized property market, however, which causes significant variations in the market performance of securitized and unsecuritized property. These variations cloud the relationship and raise a question as to whether property shares can qualify as property investments.