Residential Property Investment

Brief Excerpt from Industry Overview Chapter:

Companies in this industry invest in residential properties to generate wealth, primarily through rental income and capital appreciation. Major companies include AvalonBay Communities, Equity Residential, and Essex Property Trust (all based in the US). Major companies outside the US include CapitaLand (Singapore), Kerry Properties and Sun Hung Kai Properties (both based in Hong Kong), LEG Immobilien (Germany), and Leopalace 21 (Japan).

COMPETITIVE LANDSCAPE

Demand is driven by the supply of investment capital and demand for rental property. The profitability of individual companies depends on property values and rental rates, which are tied to the general health of the economy. Large companies have advantages in financial resources, while small companies can compete effectively by developing expertise in local markets. The US industry is fragmented: the top 50 companies account for about 30% of revenue.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major services include rental and leasing of residential space in apartments for principal residence which accounts for about 90% of revenue. Residential space in houses for principal resident accounts for nearly 10% while other residential space for principal use accounts for less than 5%. Leasing companies might represent properties that they own themselves or properties that they lease and then sublease to tenants. Residential property investors may also buy, sell, and renovate existing properties, or develop and build new ones. Apartment leasing is the largest source of industry revenue.