Secondary market
What is it?
This is a market in which financial assets that have already been issued previously in the primary market are traded. In other words, assets that are already in circulation and have been bought or initially issued are the subject of buying and selling in this market. The secondary market is crucial because it provides liquidity to investors who wish to sell their assets before maturity or before their due date.
In the real estate context, the secondary market can refer to the buying and selling of shares in real estate funds or existing properties. This allows investors to buy or sell real estate assets without having to get directly involved in the purchase of an individual property, providing more flexibility and access to the market.
Key aspects to consider
The secondary market is fundamental for providing liquidity in asset markets that, by nature, can be less liquid, such as real estate. Investors can sell their shares in real estate funds to other market participants, without having to wait for the sale of a physical asset. In this way, real estate funds, which typically invest in long-term properties, offer a way for investors to diversify and manage risk more effectively.
Furthermore, the secondary market also allows investors looking to exit an investment to do so more efficiently, without having to wait for the asset to be sold in the primary market. This market can also offer prices that are more in line with the current market reality, depending on supply and demand for the assets in question.