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Abstract
Executive Summary.Due to the heterogeneous nature of real estate assets, as well as the difficulty in selecting a reliable and representative underlying index, real estate markets are the last of the major asset classes not to have a liquid futures market. The design presented here for property futures contracts is based on a selection of NCREIF Property Indices (NPIs). Seventy-five potential underlying indexes/sub indexes in the NCREIF database are examined. The findings indicate that provided an innovative combination of contract specifications is selected, establishing NPI-based property futures and options is conceptually feasible. They would represent a notable improvement to the current situation where risk management tools are notoriously scarce for real estate investors.