Commercial Real Estate Derivatives: The End or the Beginning?

Abstract

In this article, the authors argue that the development of commercial real estate derivatives is not at a dead end but rather in a starting phase marked by the ambitious introduction of futures contracts to the IPD index, which covers the U.K. commercial real estate sector, on EUREX. The authors believe that the introduction of futures in this asset class will also open new opportunities for more advanced derivatives to be traded on EUREX over-the-counter or further down the line. They highlight the importance of forward IPD curves in designing strategies that will trade not only the level of the commercial real estate prices but also the shape of this curve.

TOPICS: Real estate, derivatives applications