What Is Real Estate?
What Is Real Estate?
Real estate deals are normally of a four-part structure which includes the land (which may be undeveloped); structures or buildings attached to that land (which may be mobile or immovable), and its accompanying natural resources like water, crops or mineral deposits; and the rights-based interests in it, i.e. immovable personal property of the nature. The various types of real estate include commercial real estate (which includes office buildings and retail outlets); residential real estate (which includes apartment buildings and condos); retail real estate (which includes privately owned shops, condominiums, etc. ); land speculators’ properties (which includes raw land); agricultural real estate (which includes farmland and ranch land); and so on.
There are several distinct economic characteristics of real estate, which are essential in determining its classifications. In a simple definition, real estate is land consisting of the buildings and other elements on it, and its accompanying natural resources like water, crops or mineral deposits; and its rights-based interests in it, i.e. immovable personal property, structures or buildings in general. A distinction is made between land used for economic purposes and that which is intended for private purposes: for example, a vacant lot used as a parking lot may be classified as primary land, while a building with all its interior retail space, furnished amenities and mechanical equipment that attracts people to it could be classified as secondary land.
The main types of real estate are the immovable personal property of the nature described above (which includes immovable buildings); economic real property which includes the underlying structures and buildings tangible assets underlying economic land (which may be factories, office buildings, warehouses, strip malls, etc. ); commercial real estate which includes the underlying structures, buildings tangible assets and other economic property (which may be retail establishments, office buildings, warehouses, etc. ); government real estate (which may be the country’s major airports, forests, urban reclamation areas or national parks); and residential real estate which may include housing developments, town houses, condominiums, row homes and other such housing structures.
The main categories of real estate are: residential, commercial and industrial. Residential real estate deals with houses, condos, apartments, town houses and condominiums; commercial real estate deals with office buildings, office complexes, warehouses, office buildings rented for business purposes and warehouses; industrial real estate deals with the development of resources (such as mines, quarries, coal mines, etc. ), major industries and associated land. The classification of real estate into these main categories provides an opportunity to appreciate the wide variety of real estate market in the United States.
The growth of the real estate market is directly related to the rise in population. As population increases, so does the demand for housing. But the real estate market can hardly sustain any increase in the supply of housing unless and until the rate of interest lowers. Thus, even if the rate of interest goes down, there would be no effect on the housing starts. This is the reason why the government has taken a cautious approach to regulate the real estate market to keep it in control.
The above definition should help us understand the broad classifications of the four main categories of real estate. There are many other smaller types of real estate like agricultural land, rural land, industrial property and land for development. Many people get confused between the terms mentioned above, and think that they all pertain to the same type of property. But they actually do not, because agricultural land is used to grow produce for retail sale; whereas industrial property is used to build factories and warehouses. And development land is used to pave the way for development projects.