Capitalization Rate (Cap Rate)
A property's annual net operating income divided by its price or value, expressed as a percentage. The standard yardstick for comparing income-producing real estate across markets.
A capitalization rate is a property's annual net operating income divided by its price or value, expressed as a percentage. It is the standard yardstick for comparing income-producing real estate: a lower cap rate signals a richer price relative to income, a higher one signals more yield or more risk.
Why it matters. Cap rates are how cross-border investors compare Tel Aviv office or logistics assets against London or New York. They translate local real estate into a number a family office anywhere can underwrite.
See also: Family Office Migration · Institutional Capital