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Property developers are exactly like market makers. If they hold inventory, they’re property speculators. The key point is that property prices remain stagnant
by jmyeet 3y ago
Property developers are exactly like market makers. If they hold inventory, they’re property speculators.
The key point is that property prices remain stagnant because a property developer creates value, turning undeveloped land into condos, etc.
Building casinos requires riding property values.
- mtoner23 3y agoThey are not market makers. They buy property and improve it's value and sell it. They are a normal business. They do not buy property just to hold it.
- s1artibartfast 3y agoI agree with your fundamental point, but I dont think you are are using market makers in the conventional manner with respect to property. A market maker doesn't hold assets for appreciation. They make money on the transactions spread, not hold and speculate. The New York Stock Exchange is a classic market maker. Property developers are classic speculators.
- danpalmer 3y ago"Market maker" is quite a specific term and is typically used to describe companies providing liquidity in a market for a given good/asset/etc. They are almost by definition not speculating, they are in the business of liquidity, and are compensated for providing liquidity. Speculators would (try to) buy low and sell high, whereas a market maker could well buy high (when speculators are trying to sell) and sell low (when speculators are buying). That sounds counter intuitive, but of course speculators aren't always right, and market makers typically aren't holding assets for enough time for prices to move much, and they make money off a small spread.