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A typical real estate investment (other than undeveloped or “raw” land) offers a total return, that consists of both an income element and capital appreciation.
 A typical commercial rental property is similar in some respects to a bond investment in that net cash flows are fixed for a term and are based largely on current interest rates, inflation and the capital cost of property. The unique difference with a real estate investment is that the income payments will usually be much higher than a bond because of the liquidity risk of the property and the fact that the rental income normally will increase in value over time.
These two unique characteristics make the returns on real estate closer to those of equities by offering the potential for growth, whereas most bonds have a principal component that does not appreciate and a fixed rate of return, which does not change with inflation.
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