California brokers and investors might not realize that real estate firms have been mixed together with insurance and bank companies in the stock market for 17 years. As of Sept. 1, however, they have their own category.
A Wall Street Journal author reports that the stock market has lumped together real estate firms with insurance and bank companies since 1999. The separation of real estate companies into their own group gives the stock market 11 categories of companies.
The individuals behind the S&P 500, which is considered the best gauge of large-cap equities, made a proposal in May for returning some life to the stock market. Since real estate firms have become much bigger players in the market, they suggested the creation of a sector specifically for the industry.
According to the Wall Street Journal author, this new classification is recognition of growth in the real estate industry. As of 2016, it holds 3.5 percent of global equities, which is an increase from 1.1 percent in 2009 and has a market capitalization of $1.48 trillion. London-based Grosvenor Group's executive director of a real estate fund believes that the new stock market category will make real estate a focal point, which means more money for the sector.
Although experts do not expect the change to be significant for specialists who only pay attention to real estate stocks, they expect it to make a much bigger impact on generalists who keep broader portfolios. The European Public Real Estate Association's chief executive told the Wall Street Journal that they believe more people will give this sector more attention in the long run.
Investors who are involved in the development, purchase or sale of commercial real estate might need litigation attorneys on their side if a dispute arises. Laws regarding real estate transactions are often complex and confusing, and the right attorneys could help investors build strong arguments for their disputes.