Transfer Pricing and Value Creation

1. S. 388Introduction

There are many definitions of what the real estate industry is, and it includes many activities. It might very simply be described as all activities related to and deriving from the owning of real estate. The real estate industry is based on physical rights to real estate. “Real” comes from the Latin root res, or things. Others say it is from the Latin word rex, meaning “royal”, since kings used to own all of the land in their kingdoms.

The real estate industry might be classified based on the type of real estate:

• Residential real estate;

• Commercial real estate;

• Industrial real estate;

• Land.

Another classification of the real estate industry arises from a lifecycle of real estate (from acquisition of land, construction of a building, and sale of property until a holding of property and / or sale or demolition):

• Concept and acquisition (Pre-Development phase);

• Design and construction (Development phase);

• Ownership and management of the real estate (Developed stage);

• Sale, redevelopment, renovation, demolition.

From the classification of the real estate industry based on the lifecycle of real estate, the main activities performed in the industry might include owning land, constru...