In layman’s terms, asset is anything that has tangible monetary value to it. This list can include any kind of physical asset which increases the worth based on its properties and substances. Most commonly real assets are precious metals, natural resources, commodities, equipment, land and most importantly real estate. To put it in perspective, assets are anything that directly impacts your financial well-being. These are quite lucrative deals to investors as they are often high return on investment, has hedge against inflation, comes with tax benefits and has a lower covariant when it comes to equity investments. These types of investments add value to any investor’s portfolio as it maximises returns and reduces risk by diversifying them.
Now that you have a fair idea of what real estate assets mean, it is important that you look through its definition. Learning the definitions can help you understand the concept better and also make sense of it.
i. A real estate asset mainly caters to any kind of investment made by an operating partner or a company in an improved or unimproved real property directly from one or more subsidiaries or via a joint venture. This investment will include everything from fee, to leases and leasehold interests.
ii. Real estate assets mean any investment in either properties, loans or another permitted investment whether personal, real or otherwise, intangible or tangible that get transferred or held by or owned for a company or its subsidiaries.
Real assets have a number of benefits to them, further making them a much more useful investment when compared to other conventional investments. Some of the more popular uses of real assets include:
1. The advantage of stability:
This is perhaps the primary reason why most people invest in real estate assets. Real estates have much better stability when compared to other similar kinds of financial assets. In situations of inflation or currency valuation, finances can see a much bigger effect that real assets.
2. Safe from financial market volatility:
Another advantage of investing in real estate assets is that it is not highly dependent on the financial market volatility. If you are looking for an alternative to risk diversification, which also offers profitability, real assets might come in handy. These are neither dependent not related on financial markets.
3. Less known about market:
Thirdly, since the real assets market is much less talked about, especially in comparison to the capital market, there are not many people who understand it. This makes it easier for investors to potentially get higher profits.
