Contrast the key features of real estate investments that matter for valuation

Property differs from shares and bonds in ways that shape valuation. Each building is unique in location, age and tenants, so there is no single market price and value must be estimated, often by appraisal. Unit values are high, which limits diversification and makes debt finance usual; leverage magnifies the return on equity in both directions. Transaction costs, due diligence and management effort are heavy, and a sale can take months. Buildings depreciate physically and become obsolete, so they need capital spending. Returns come from rental income plus change in value. The trap is treating an appraised value as a transaction price, or comparing a leveraged equity return with an unleveraged property benchmark without adjusting for the debt.