The first feature of investment in real estate identified by Hamilton and Heinkel is its relative immobility, meaning that assets such as land, large structures and other fixtures established on properties (e.g., buildings) are, for all intents and purposes, permanently rooted in their respective locations. Hence, while the market for direct ownership of real estate is national and international, its operation is uniquely local. This suggests that the information intensity of mostly private real estate investing is heavily determined by geography as Canadian community and regional sub-markets are frequently distinct with regard to the nature of properties, demand and supply trends, economic fundamentals and other area-specific variables. As a consequence, the value of real estate assets in one sub-market may be completely different from that in a neighbouring district.

Of course, it is the transactional job of agents and intermediaries to collect precise and up-to-date information relevant to pricing, operating costs and investment opportunities. To do this, such professionals must be knowledgeable about local sub-markets across the country and incur quite substantial, up-front expenditures.

Another feature of real estate assets is their long lifespans. Generally speaking, residential, commercial and industrial properties and adjoining structures enjoy, as physical entities, long-term duration in a given locality. This, combined with their relatively immobility, suggests that the current price of an individual property will be inordinately affected by the quality of surrounding properties, and vice versa. Of equal importance, is the economic lifetime of periodic structural alterations or improvements on properties, or complete replacement of structures, that can augment or restore underlying value and generate returns to owners and investors.

Real estate is further characterized by low rates of turnover in ownership. Hamilton and Heinkel estimate the average holding period to be approximately ten years. Limited turnover is matched by fairly long periods for marketing both residential and non-residential properties for new owners. These traits of investment in real estate, like illiquid investment in other private capital markets, have critical ramifications for financial performance measures that may not be simply or frequently provided.

In the case of real estate, however, there is a traditional and well-developed source of price data and property valuation provided by a industry of specialized and independent market analysts and appraisers. A prominent and commonly-utilized Canadian measure and benchmark of returns over time is, for example, the Morguard/Russell Canadian Property Index (an amalgam of two previously distinct indices). Among the fourteen entities responsible for $15 billion in real estate investing represented in this index, there are large pools and syndicate operations (e.g., Morguard Investments and Penreal Capital Management - see below) and subsidiaries (e.g., the Caisse de dépôt - see below - and OMERS) utilized by pension funds and other institutional investors. Reports are made quarterly.^{Endnote 110}

Along with the information-related costs, aspects of real estate investing can include exceptionally high capital costs influenced by local conditions. For the most part, this is due to the sheer size and scale of properties being purchased, especially those that are commercial or industrial. On the other hand, this also suggests one of the chief attractions of real estate markets for institutional investors, given the opportunity for allocating a large proportion of assets to a few projects over the long haul. The disposal of holdings also involves costs that rise with rates of liquidation.

Finally, the procedure of supplying marketplace responses to real estate demand shifts is a slow one. Major development and re-development projects tend to occur over several years because of the time required for the processes of planning, approval (by municipal and other governments, according to certain public standards for zoning and construction, among others) and implementation. They are longest in the case of large, non-residential properties. When combined with local circumstances, this factor can introduce a degree of uncertainty and risk to investment activity.

Taken together, real estate's intrinsic characteristics of relative immobility and durability, and market characteristics of comparative illiquidity, high costs and some risks, indicate the challenges to investors interested in high yields and the historic advantage offered by this asset class as an inflation hedge.