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Paper eres2005_196:
Suggested vs. Actual Institutional Allocations to Real Estate: A Matter of Size?

id eres2005_196
authors Hoesli, Martin and Jon Lekander
year 2005
title Suggested vs. Actual Institutional Allocations to Real Estate: A Matter of Size?
source Book of Abstracts: 2005 European Real Estate Society conference in association with the International Real Estate Society
summary The discrepancy between suggested and actual allocations to real estate by institutional investors constitutes a puzzle. The allocation to real estate, however, has increased in recent years and as a result the flows to the market are now of great magnitude. In this paper, we argue that an increased allocation is made possible mainly by the development of new investment vehicles, in particular of private real estate funds, but also of the growing integration of economic regions and of other factors such as the development of investment benchmarks. The increased inflow of capital is suggested to be a function of two factors; an increased focus on absolute return target investments amongst institutional investors and an increased target allocation to real estate. The flows to the market for the actual allocation to match the suggested allocation are found to constitute at least 31% of the real estate equity universe held by owner occupiers. We estimate that seven years would be needed to reach the target allocation, but it is unlikely that sufficient investment opportunities will arise unless the willingness of owner occupiers to sell off real estate assets from their balance sheets increases.
series ERES:conference
type normal paper
discussion No discussions. Post discussion ...
ratings
session Session B3
last changed 2008/11/01 09:47
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