DEFINITION of 'Property Derivative'

A type of financial product that fluctuates in value depending on the changes in the value of a real estate asset, usually an index. Property derivatives provide investors with exposure to a specific property market without having to buy and sell actual buildings.

BREAKING DOWN 'Property Derivative'

It is important to note that these products generally incorporate the use of advanced instruments such as swaps, forwards and property index notes, which is why this market is dominated by sophisticated investors and large institutions.

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