Financial Engineering in Property

Property is the choice of investors amongst many avenues of asset classes and constitutes a significant share of the global wealth. The economic performance of most developed countries is influenced by the performance of their real estate markets. The property investment has witnessed numerous cycles of growth and recession, and is now considered as a mature and sophisticated market. In order to attract even wider participation, and to meet the appetite of diverse range of investors, newer instruments (in particular) real estate derivatives, are being developed across the globe. While financial and commodity derivative products are being used widely, financial engineering in property is relatively recent. These products have the potential to offer better returns and diversification, while prone to significant risks as the potential to destabilize the operating environment is large. It would be imperative to have better risk management capacity to configure and utilize these instruments.