I have made the argument that I think real estate can be an interesting way to gain exposure to developing frontier markets. Well, we're nothing if not fair on this site, so here is the other side of that coin. The perils, as listed by a successful hedge fund manager whose focus is frontier markets and who rarely touches anything real estate-related:
-Requires a lot of local market knowledge about location, developers, competing projects, etc. that is not really available
-Takes far more effort to analyze real estate stocks than other stocks that are a play on local consumer economy
-Tends to be more problems in real estate stock investing -- valuations are suspect, transparency often not good, promoters sometimes suspect, etc.
-We don't like leverage, and leverage is often required for a real estate investment to work
-The real estate bubble that the U.S. experienced was truly global in scope, even affecting some (certainly not all) frontier countries
-Finally, from a time allocation perspective, real estate simply takes too much time
All considerations that are important. And all of them reasons that real estate is an investment class that requires on the ground research and investigation.
