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Suggested Versus Actual Institutional Allocations to Real Estate in Europe: A Matter of Size?
Aberdeen Property Investors Nordic Region in Stockholm, Sweden.ORCID iD: 0000-0002-1205-2129
2005 (English)In: The Journal of Alternative Investments, ISSN 1520-3255, E-ISSN 2168-8435, Vol. 8, no 2, 62-70 p.Article in journal (Refereed) Published
Abstract [en]

The allocation to real estate by institutional investors has increased in recent years and as a result the gap between suggested and actual allocations has narrowed. The increased inflow of capital to the real estate market is suggested to be a function of two factors: An increased focus on absolute return target investments among institutional investors and an increased target allocation to real estate. This article argues that the increased target allocation is made possible mainly by the development of new investment vehicles, in particular private real estate funds, the growing integration of economic regions, and other factors such as the development of investment benchmarks. The flows needed for the actual allocation by European institutional investors to match the suggested allocation requires that at least 31% of the real estate equity universe be held by owner occupiers. The authors 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 outsource their real estate assets increases.

Place, publisher, year, edition, pages
2005. Vol. 8, no 2, 62-70 p.
Keyword [sv]
Allokering till fastigheter, institutionella förändringar, investeringsslag
National Category
Economics and Business
Research subject
Real Estate and Construction Management
Identifiers
URN: urn:nbn:se:kth:diva-196527DOI: 10.3905/jai.2005.591578OAI: oai:DiVA.org:kth-196527DiVA: diva2:1046769
Note

QC 20161115

Available from: 2016-11-15 Created: 2016-11-15 Last updated: 2016-11-15Bibliographically approved
In thesis
1. Institutional Real Investments: Real Estate in a Multi-Asset Portfolio
Open this publication in new window or tab >>Institutional Real Investments: Real Estate in a Multi-Asset Portfolio
2016 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The purpose of this thesis is to analyze real estate investments from the vantage point of an institutional multi asset investor perspective, both in terms of the potential benefits real estate can bring as well as the challenges it can pose. The thesis consists of six papers and approaches the research question from three distinct perspectives.

The quantitative papers consists of paper 1 and 5. Paper 1 analyses the portfolio characteristics of domestic and international real estate in a mean variance framework over seven investor domiciles. It is found that the optimal allocation to real estate is in the range of 15-25 percent depending on domicile of the investor. The fifth paper expands the analysis in paper one by expanding the data. Furthermore, the analysis is extended to investigate how the structure of the real estate portfolio can support a diversification objectives best.

Papers 2, 3 and 4 are the market related papers. Paper 2 compares the suggested allocation weights with the allocation to real estate of institutions in four countries, and finds that the actual allocation is significantly lower and that all investor domiciles have a significant home bias. The third paper discusses changes in the institutional framework of real estate markets and the size of the investment universe. Paper 4 discusses various entry points to the real estate market, and how an investor can utilize these in order to adjust the characteristics of the real estate portfolio.

The sixth and last paper is qualitative, and investigates how institutions managing pension capital handle real estate. ​

Place, publisher, year, edition, pages
KTH Royal Institute of Technology, 2016. 37 p.
Series
TRITA-FOB-DT, 2016:5
Keyword
Real Estate Investment, Asset Allocation, Alternative Assets, Multi-Asset Portfolio
National Category
Economics and Business
Research subject
Real Estate and Construction Management
Identifiers
urn:nbn:se:kth:diva-196536 (URN)978-91-85783-71-7 (ISBN)
Public defence
2016-12-09, Kollegiesalen, Brinellvägen 8, Stockholm, 13:00 (English)
Opponent
Supervisors
Note

QC 20161115

Available from: 2016-11-15 Created: 2016-11-15 Last updated: 2016-11-16Bibliographically approved

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