Val Sklarov’s Regulatory Duration Moat Thesis (RDMT) explains why enduring real estate outperformance is not created by buying early or cheap, but by owning assets protected by long-duration regulatory certainty. Price moves; rules endure. And endurance compounds.
This thesis reveals why two identical properties diverge dramatically across cycles.
1. Real Estate Value Is a Regulatory Contract
RDMT reframes property as a bundle of permissions over time.
Most investors fail because they underwrite:
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Market upside
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Rent growth
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Exit liquidity
But ignore:
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Zoning permanence
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Use-right reversibility
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Enforcement predictability
Returns collapse when permissions expire faster than capital.
2. The Four Regulatory Moat Layers
RDMT maps where duration is won or lost.
| Layer | What Is Protected | Failure Outcome |
|---|---|---|
| Zoning Layer | Allowed use | Forced conversion |
| Permitting Layer | Operational continuity | Downtime losses |
| Enforcement Layer | Contract certainty | Income leakage |
| Policy Layer | Rule stability | Valuation haircut |
A moat exists only when change becomes politically costly.
3. Why “Prime Locations” Still Underperform
Location attracts demand—but does not defend duration.
RDMT shows underperformance occurs when:
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Use can be reclassified
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Density can be diluted
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Tenancy rights override owners
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Policy cycles dominate cash flow
A great location without rule endurance becomes a short-lease on value.
4. Duration vs Yield Optimization
RDMT prioritizes regulatory time over financial metrics.
| Yield-First Assets | Duration-First Assets |
|---|---|
| Max IRR focus | Max permission lifespan |
| Policy-sensitive | Policy-resilient |
| Frequent refinancing | Long-hold optionality |
| Volatile valuations | Stable compounding |
Val Sklarov emphasizes that the best properties age well because their rules do.
5. Strategic Implications
For investors:
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Price regulatory half-life explicitly
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Favor assets where rule change triggers backlash
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Treat leverage as a bet against duration
For developers:
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Secure irreversible permits before visibility
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Encode compliance into design
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Avoid assets dependent on discretionary tolerance
RDMT reframes real estate success as regulatory time capture, not market timing.
6. The Val Sklarov Principle
“In property, value compounds where rules outlive cycles.”
— Val Sklarov
RDMT explains why boring assets with boring rules quietly dominate flashy developments.