Is Real Estate more or less efficient than others assets?

The answer is less, and that is why this field/asset class is so awesome to work with.. Below is the text from my favorite response I think I ever made that relates to this question.. Link to post https://www.wallstreetoasis.com/forums/whats-the-catch-in-cre#comment-2…;

 The Beltsander:

So my question is what is the catch here? High attrition, boring / repetitive work, or just high barriers to entry? Does the job and skillset change over time (like in banking)? Is the best paying work cyclical and carry a higher risk of losing your job if you under perform?

I mean, to some extent, there is some 'truth' in all of these points. Real estate is competitive, meaning more people and dollars chasing a limited number of deals/opportunities, thus there will be winners and losers from time to time. Is this different from the I-banking/finance world? Not as much as some people think.

Real estate is really specialized, that is the 'catch'. You specialize in markets, asset type, deal type, and function type (in your own career). Property doesn't have a 'ticker' symbol you can key into a bloomberg terminal and get all the details and then trade with a click. Even a simple plain vanilla real estate transaction is like a complicated M&A deal by comparison to a stock trade or even basic business lending.

I know real estate people that literally specialize in one asset class in one small sub-market of a city, and make a whole career out of it. I have a really good friend who ran a large development for a major corp that spanned three decades (it has a theme park on it everyone would know and has maybe been to once). He started young, did all the entitlements, ran it through a few mergers and sales of his parent company. Then retired with a pension, and got rehired as a consultant who still makes six figures in fees (plus bonus commissions because he is a broker when some of the remaining parcels sell). Why? Because he knows the details of the properties, the deals made decades ago with the county on entitlements, etc.

That is the real benefit of real estate, its micro-specific and that allows for specialization and information asymmetry. Really difficult in finance, and even illegal if called 'insider trading', but that is everyday in real estate.

The final point is that few b-schools have professors who know anything about real estate. The finance faculty actually 'look down' on real estate as an asset class and career. Some literally think studying real estate just means 'selling houses', yet it's the biggest asset class by far when you include value of mortgages and derivatives on mortgages.

So many graduate knowing nothing about a field that requires specialized knowledge to work within. In my opinion, this is the definition of a 'market inefficiency' and one that has given me and many of those on here and else where a very rewarding career to date.

Is there risk of 'blow out'? Of course, but I don't if that different from corp fin/IB/PE/HF, etc. If you use a lot of leverage (and RE can let you do that), you take more risk. But that is really just the case of leverage, not really real estate.