Real estate is losing favor among institutional investors according to a new analysis from real estate advisory firm Hodes Weill and Cornell University's Baker Program in Real Estate
Real estate is losing favor among institutional investors according to a new analysis from real estate advisory firm Hodes Weill and Cornell University’s Baker Program in Real Estate.
The global 2017 Allocations Monitor draws on information from 244 institutional investors in 28 countries, representing $11.5 trillion assets under management of which $1.1 trillion is in real estate.
Forty-four percent of the institutions have a target for the real estate share of their portfolio of more than 10%; up from 27% of institutions in 2016 and 18% in 2015.
However, while this might suggest confidence in real estate as an investment by the institutions, the study’s Conviction Index declined in this year’s report to 4.9 from 5.4 in 2016.
Respondents said that their sentiment in real estate investments was “slightly pessimistic” compared to last year’s moderate optimism; not surprising given that returns on real estate investments fell from 11% in 2015 to 8.6% last year.
Also, while 92% of the respondents said they invest in real estate, 60% are under-invested compared to their target allocations, up from 50% a year ago.
Among the issues that investors in the Americas say are impacting returns are values and rising interest rates.
The global 2017 Allocations Monitor draws on information from 244 institutional investors in 28 countries, representing $11.5 trillion assets under management of which $1.1 trillion is in real estate.
Forty-four percent of the institutions have a target for the real estate share of their portfolio of more than 10%; up from 27% of institutions in 2016 and 18% in 2015.
However, while this might suggest confidence in real estate as an investment by the institutions, the study’s Conviction Index declined in this year’s report to 4.9 from 5.4 in 2016.
Respondents said that their sentiment in real estate investments was “slightly pessimistic” compared to last year’s moderate optimism; not surprising given that returns on real estate investments fell from 11% in 2015 to 8.6% last year.
Also, while 92% of the respondents said they invest in real estate, 60% are under-invested compared to their target allocations, up from 50% a year ago.
Among the issues that investors in the Americas say are impacting returns are values and rising interest rates.
