This week, CB Richard Ellis is expected to announce the formation of a joint venture that will tap into the fledgling property derivatives market. The venture between CB Richard Ellis and Manhattan-based securities inter-dealer broker GFI will reportedly sell derivatives contracts to investors.
The derivative products will offer investors stakes in the real estate market without the risk of actually buying the properties. Derivatives are contracts whose value is based on the performance of an underlying financial asset, in this case real estate.
The news was initially reported on June 19 by the Telegraph, a British newspaper. According to the report, CB Richard Ellis expects the market for commercial real estate-based derivatives to be as huge as $36 billion. This would be Los Angeles-based CB Richard Ellis’ first venture into the derivatives market. CB Richard Ellis declined to comment on the announcement.