Real estate is considered one of the safest investment because the value of the asset is not volatile. A building has a value and its value does not fluctuate in the day, month or other short period of time. As opposed to crypto and financial markets, the investment is secured by the asset itself. Real estate holds its value over time and rarely loose value for a long period of time. Unlike fiat currencies and stable coins, real estate does not loose value to inflation but performs better and therefore is an effective way to hedge against inflation.
Real estate has proven to be resilient especially in the face of sudden movements on financial markets. Traditional financial markets and crypto markets are known to be highly volatile when real estate on the contrary represent a safe way to diversify capital exposure while earning interests.
Real estate offers significant ways to diversify within the asset class itself, through different geographies exposure and assets types. This can significantly mitigate risks for investors and absorb losses when sudden market downturn. As such, during Covid-19 crisis, offices were empty and tenants vacating cities, while retail and logistics assets outperformed with online shopping, offering diversified investors a way to absorb losses and make profit from the crisis.
Real estate generates yield through real world rents. Unlike financial and crypto markets, real estate produces recurring monthly yields that provides a source of income uncorrelated to time spent working for investors. Cash flows produced by real estate are an effortless source of stable income. There are other ways real estate can generate yields such as value added investments in the asset that in turn increase the assets’ value. For that reason, real estate offers a great deal of flexibility and different possibilities in extracting value.
Real estate has long proven its resilience when market downturns and performs better in the long run than financial markets. Great diversification mean across asset classes and geographies, almost all real estate park is nonetheless in the hands of 1% high net worth individuals, professional and institutional investors.