Direct Real Estate Investment Considerations for a Pension Fund in an Emerging Market

Consider a pension fund that is evaluating a potential direct real estate investment in an emerging market. The fund's primary objective is to generate stable income while also seeking capital appreciation over the long term. The emphasis on direct investment reflects the fund's strategy to actively manage its real estate assets.

Provide a detailed analysis of the key considerations the fund should take into account when assessing this direct real estate investment opportunity. Your answer should address the following:

• Market fundamentals specific to real estate in the emerging market
• Potential risks involved in direct real estate investment
• Strategies for mitigating these risks while optimizing income and capital appreciation
• Impact of local regulations and economic conditions on the investment performance

Support your analysis with relevant examples and theoretical concepts from real estate investment literature.