Real Estate Investment: A Strategic Approach Free

Real estate is an odd investment for funds. Not that it does not perform or that it does not have variable returns over time but because it is not a piece of paper and, as such, many financial analysts just do not understand it as an asset class. Likewise, property professionals are good at looking at real estate investments as single assets but they do not understand the role of property in a multi-asset portfolio. There is a lacuna of knowledge between the understandings of the capital and property markets.

Part of the problem is that, in most university courses, you other study finance with real estate added on or you study property from a single asset perspective. And this is reflected in the current textbooks. If you look at US textbooks side by side with UK textbooks and they are teaching two different disciplines. In the USA, the vast majority of real estate programmes are run from the business schools or finance departments were the lecturers, generally, are financially trained and have never worked in the real estate industry. As such, the teaching tends to concentrate upon real estate investment trusts (REITs) and not individual properties. Indeed, I recently attended an American “Real Estate” conference and of the five papers that I attended not one of them talked about real estate. Not all US teaching follows this pattern; there was a famous course at the University of Wisconsin in Madison run by James Graaskamp which taught property from an interdisciplinary viewpoint (Graaskamp, 1991). But, there were two things that were interesting about that approach. One, it was considered different and revolutionary and, two, it mimicked the way that the UK and the commonwealth has always taught real estate. But, as with all things, it is not that either is wrong (they are looking at the same thing from a different viewpoint). What is needed is someone to write about property from both points of view. That is what Andrew Baum achieves.

This book, in its third incarnation, Baum talks about property both as an individual asset (that is affected by legal agreements; economic conditions; physical location and planning) and as a component of a global fund. As with all Baum’s books, the text is divided into a number of parts, each with numerous chapters and sub sections:

1. Part 1: introduction to the market

   • Commercial property: the asset class

   • The market – and who makes it

2. Part 2: the investment process

   • Building the portfolio

   • Pricing real estate: the purchase and sale process

   • Performance measurement and attribution

3. Part 3: investment vehicles

   • Listed real estate

   • Unlisted real estate funds

   • Property derivatives

4. Part 4: international real estate investment

   • International real estate investment

   • Building the global portfolio

In our own teaching, the textbook is the final piece of my teaching regime. We teach property as an asset initially and then move on to property as a portfolio investment. Our final module, quite aptly, is called “Strategic Real Estate Investment”. Unsurprisingly, this is our core text.

Anyone who has read any of my previous book reviews knows that I think that Baum’s books stand head and shoulders above the vast majority of other real estate textbooks that are available. His writing style is detailed and easy to follow and his understanding and experience of the topic is in-depth and complete. This is an essential textbook for the shelf of all real estate students and practitioners.