In the context of property research, an illiquid investment is an asset that cannot be easily converted into cash. This means that it can be difficult to sell the asset quickly and at a fair price.
There are a number of factors that can make an investment illiquid, such as:
- The size of the investment: Large investments are often more illiquid than smaller investments, as there are fewer buyers and sellers in the market.
- The type of asset: Some assets, such as real estate, are more illiquid than others, such as stocks.
- The market conditions: Illiquidity can also be caused by market conditions, such as a recession or a financial crisis.
In the Australian context, some examples of illiquid investments include:
- Real estate: Real estate is a relatively illiquid asset, as it can take time to find a buyer and sell the property at a fair price.
- Private equity: Private equity is a type of investment in which investors pool their money to buy a company or a business. Private equity is illiquid because it can be difficult to sell the company or business quickly and at a fair price.
- Art: Art is another example of an illiquid asset, as it can be difficult to find a buyer who is willing to pay the asking price.
Illiquid investments can be a good option for investors who are looking for long-term growth, as they are not as susceptible to short-term market fluctuations. However, illiquid investments can also be risky, as it can be difficult to sell them quickly if you need cash.