SECTOR, REGION OR FUNCTION? A MAD REASSESSMENT OF REAL ESTATE DIVERSIFICATION
||Byrne, Peter; Lee, Stephen
||SECTOR, REGION OR FUNCTION? A MAD REASSESSMENT OF REAL ESTATE DIVERSIFICATION
||17th Annual European Real Estate Society Conference in Milan, Italy
||This paper re-examines whether it is more advantageous in terms of risk reduction to diversify by sector or region by comparing the performance of the ""conventional"" regional classification of the UK with one based on modern socio-economic criteria using a much larger real estate data set than any previous study and the MAD portfolio approach. The general conclusion of which is that property market sectors still dominate regions, however defined and so should be the first level of analysis when developing a portfolio diversification strategy. This is in line with previous research. Then when the performance of Functional groups is compared with the ""conventional"" administrative regions the results here show that when functionally based groupings provide greater risk reduction. In particular Functional groups may be much more insightful and acceptable to real estate portfolio managers.
||UK, Sectors and Regions, MAD optimisation, functional groups
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||Real Estate Investment (3)
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