![Sample our Built Environment journals, sign in here to start your access, Latest two full volumes FREE to you for 14 days]({"type":"image" , "src" : "/sda/5926/TOC-Subject-Sample-2021-Built-Environment.jpg"})
Abstract
Executive Summary. As index-based real estate deriv-atives are being introduced in the United States, this pa-per questions the validity of these instruments for hedging risks involved in commercial real estate markets. It first shows that the concept of index-based derivatives may not be appropriate for intrinsically heterogeneous assets such as real estate. Based on an innovative frame-work drawn from the field of biomedical sciences, it then proposes the establishment of a radically new breed of derivatives market that would enable effective hedging of commercial real estate assets. It concludes by outlining a framework for modeling real estate risk based on ge-netics that could be used with the proposed derivatives market.
This paper is the winner of the best paper on Innovative Thinking “Thinking Out of the Box” (sponsored by the Homer Hoyt Advanced Studies Institute) award pre-sented at the 2007 American Real Estate Society Annual Meeting in San Francisco, California.