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Global Real Estate Investment: Characteristics, Optimal Portfolio Allocation and Future Trends

Author/s: Mark Steinert, Scott Crowe

Date Published: 1/01/2001

Published in: Volume 7 - 2001 Issue 4 (pages 223 - 239)

Abstract

In response to the increasing importance of real estate investment internationally, we examine the current characteristics of global real estate markets, including the performance of global real estate, the extent of securitisation of institutional grade property around the world and a comparison of the gearing levels in international securitised property markets. We also examine current investor allocations to real estate and demonstrate the portfolio diversification benefits available from increased weightings to securitised property, suggesting an optimal portfolio allocation of 10-20%. We suggest that investors are able to gain even further diversification benefits via the introduction of international real estate allocations to investment portfolios. The paper also provides an analysis of the likely future trends in global real estate.

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Keywords

Diversification Benefits - International Property Investment - Listed Property Trusts - Optimal Portfolio Allocations - Securitised Real Estate

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