Global Institutional Investors’ Average Target Allocation to Real Estate Exceeds 10%, Finds Hodes Weill & Associates and Cornell University
The real estate asset class continues to experience growth in institutional capital allocations. In fact, 2017 represents an important milestone in this regard according to Hodes Weill & Associates and Cornell University’s fifth annual Institutional Real Estate Allocations Monitor. This year’s survey revealed that for the first time, global institutional investors’ average target allocation to real estate surpassed the 10% threshold.
This press release features multimedia. View the full release here: http://www.businesswire.com/news/home/20171012005325/en/
To download the full report which was published today, please visit: www.hodesweill.com/research.
The Allocations Monitor shows that the average target real estate allocation increased to 10.1% in 2017, up from 9.9% in 2016 and 8.9% in 2013—the year in which the survey was first conducted. Over the past five years, institutional portfolios have increased their exposure to real estate from 8.5% to 9.1% invested. This implies that real estate portfolios have increased by approximately $0.5 trillion in total value, through a combination of capital appreciation and new investments.
Douglas Weill, Managing Partner at Hodes Weill & Associates, said, “Real estate has proven over time to be an important portfolio diversifier, producer of stable income and hedge against inflation, which is why it’s no surprise that this strategic asset class now exceeds a target allocation of 10% in global institutional portfolios.”
Although real estate has enjoyed a steady uptick in target allocations, the report reveals the pace of target allocations is moderating. Approximately 22% of institutional investors surveyed indicated that they expect to increase their target allocations over the next 12 months, down from 30% in 2016. What’s more, the pace of increase in target allocations slowed to 20 basis points in 2017 compared to an average of 30 to 40 basis points per year since 2013.
“While exceeding the 10% threshold is a seminal moment, the steady growth in allocations to real estate that the industry has experienced over the years appears poised to decelerate in the near term. This is due primarily to waning investor confidence, a trend that we’ve seen grow increasingly stronger since we first began conducting the survey. However, we anticipate that the long term outlook for institutional capital allocations to real estate will remain positive given the asset class’ many benefits,” continued Weill.
The report notes that a bevy of factors have contributed to a significant year-over-year decline in institutional confidence in the asset class. The survey’s “Conviction Index,” which measures institutional investors’ view of real estate as an investment opportunity from a risk return standpoint, declined from 5.4 to 4.9 over the past 12 months. Institutional investors cited frothy valuations, geopolitical unrest, possible interest rate increases and global capital markets volatility as causes for concern.
Reflecting institutional investors’ decline in confidence, the report reveals that portfolios remain approximately 100 basis points under-invested relative to target allocations. While higher-returning valued-add strategies remain the strong preference for institutions, 60% of those surveyed signaled an increased appetite for defensive debt and private credit strategies.
As it relates to investment vehicles, closed-end funds are the most preferred by institutions followed by open-end funds. Moreover, 31% of institutional investors reported that environmental, social and governance (ESG) factors are influencing their investment decisions.
Worldwide, institutional real estate portfolios generated an average annual return of 8.6% in 2016, down from 11.0% in 2015. However, investment returns exceeded targeted returns by 20 basis points and remain well ahead of global return indexes for real estate. The trailing five-year average annual investment return was 10.4%. Institutions in the Asia Pacific region achieved the highest average annual return in 2016 at 9.3%, followed by the Americas at 8.7%.
Dustin Jones, Director of the Baker Program in Real Estate at Cornell University, commented: “The Allocations Monitor provides an unparalleled look into how, where and why institutions are allocating capital to real estate. It has proven to be a valuable tool for institutional investors in the development of portfolio allocation strategies and peer benchmarking of returns, and for investment managers in business planning and product development.”
The Institutional Real Estate Allocations Monitor includes research collected from 244 institutional investors in 28 countries, with total assets under management exceeding US$11.5 trillion and portfolio investments in real estate totaling approximately US$1.1 trillion.
About Hodes Weill & Associates
Hodes Weill & Associates ("Hodes Weill") is a real estate advisory boutique with a focus on the investment and funds management industry.* The firm has offices in New York, Hong Kong and London. Founded in 2009, Hodes Weill provides institutional capital raising for funds, transactions, co-investments and separate accounts; M&A, strategic and restructuring advisory services; and fairness and valuation analyses. For more information, please contact email@example.com or visit www.hodesweill.com.
*All U.S. regulated capital market and securities advisory services are provided by Hodes Weill Securities, LLC, a registered broker-dealer with the SEC, and a member of FINRA and SIPC, and internationally, by non-U.S. Hodes Weill affiliates. All investment advisory services are provided by HW Capital Advisors, LLC, a registered investment adviser with the SEC.
About Cornell’s Baker Program in Real Estate
Cornell’s Baker Program in Real Estate is home to the Masters of Professional Studies in Real Estate degree, a comprehensive, graduate-level curriculum that educates the next generation of real estate industry leaders. Cornell is also home to the Cornell Real Estate Council, an extensive network of over 1,400 real estate industry leaders, as well as the annual Cornell Real Estate Conference. For more information, please visit https://baker.realestate.cornell.edu/
ICR on behalf of Hodes Weill
Jason Chudoba, 646-277-1249
Om Business Wire
(c) 2018 Business Wire, Inc., All rights reserved.
Business Wire, a Berkshire Hathaway company, is the global leader in multiplatform press release distribution.
Følg saker fra Business Wire
Registrer deg med din epostadresse under for å få de nyeste sakene fra Business Wire på epost fortløpende. Du kan melde deg av når som helst.
Siste saker fra Business Wire
Robinson Fresh® and Verfrut Bring Premium Fruit to Europe21.2.2018 04:00 | Pressemelding
Robinson Fresh®, a division of C.H. Robinson, is now the primary provider of Verfrut products in Europe. Verfrut is one of the largest fruit growers in South America with items such as grapes, apples, stone fruit, cherries, pears, kiwifruit, clementines and organic bananas. With this strategic alliance, the companies bring together expertise in cold chain logistics and produce to provide a more integrated fruit offering to Europeans. This press release features multimedia. View the full release here: http://www.businesswire.com/news/home/20180220006476/en/ “When we heard Verfrut was looking for opportunities to expand into the European market, we knew we could work together to bring these premium products to our customers,” Robert Walsleben, European director for Robinson Fresh, said. “Verfrut is one of the largest fruit growers out of Chile and Peru. They are also family owned, feature significant production and care about providing flavorful products to their customers. Europeans wil
Bigelow Space Operations Announces Partnership with CASIS to Fly Payloads to the International Space Station21.2.2018 00:18 | Pressemelding
Bigelow Space Operations (BSO) is proud to announce a partnership with the Center for the Advancement of Science in Space (CASIS), manager of the International Space Station (ISS) U.S. National Laboratory. BSO is officially a user of the ISS National Lab, and will be facilitating the integration of payloads for commercial, academic and government customers. In this capacity, BSO intends to contract with other payload integrating companies where we not only can help those companies to develop their dynamic futures for themselves and their successful clients extending beyond ISS operations, but to also offer ourselves as a customer and understand how to help CASIS. This may be important if CASIS is to someday enable usage of B330 stations. BSO’s mandate is to promote the services of the ISS National Lab, promote other payload facilitating companies and to develop new relationships for the ISS and Bigelow Aerospace stations. BSO will kick off this through a recently awarded CASIS partner
Bigelow Aerospace Announces the Creation of Bigelow Space Operations20.2.2018 22:00 | Pressemelding
Bigelow Aerospace is excited to introduce Bigelow Space Operations (BSO), a new commercial space company that is the sales, operational and customer service company that manages and operates space stations developed by Bigelow Aerospace. With the two launches of B330-1 and B330-2 expected in 2021, the time is now in 2018 to begin BSO activity. These single structures that house humans on a permanent basis will be the largest, most complex structures ever known as stations for human use in space. The customers that B330 will seek to accommodate will be very diverse. Bigelow Space Operations has a mission to market and operate these and other space stations including future generations developed by Bigelow Aerospace that are so capable, so diverse and so large that they can accommodate virtually unlimited use almost anywhere. Over time, Bigelow Aerospace will manufacture a single station, launched on a single rocket that will contain over 2.4 times the pressurized volume of the entire In
Andersen Tax & Legal Launches in Egypt20.2.2018 14:30 | Pressemelding
The Andersen name launches in Egypt this week as Maher Milad Iskander and Co., an Egyptian tax and legal firm based in Cairo, formally adopts the name Andersen Tax & Legal. Maher Milad Iskander and Co. became a collaborating firm of Andersen Global in July of 2017 and is one of three that have become member firms and adopted the Andersen name thus far in 2018. Maher Milad Iskander, Managing Partner of Andersen Tax & Legal in Egypt, said, “Andersen Global’s strategy of focusing on outstanding tax and legal services will provide us with many advantages and will allow us to even better serve our cross-border clientele. We are looking forward to our continued work with the Andersen team and to seamlessly providing innovative and client-focused solutions on a global level through our colleagues around the world.” “Egypt is considered to be one of the highest growing markets in the world and our adoption of the Andersen name in Egypt has come at the perfect time,” added Global Chairman and A
Proposals of the Supervisory Board to Be Submitted to the Annual General Shareholders' Meeting of Sartorius AG20.2.2018 14:00 | Pressemelding
At today’s meeting, the Supervisory Board of Sartorius AG, approved the Executive Board’s recommendation to submit a proposal to the Annual General Shareholders’ Meeting on April 5, 2018, to raise dividends to 0.51 euros per preference share and 0.50 euros per ordinary share. Prior-year dividends were 0.46 euros and 0.45 euros per preference share and per ordinary share, respectively. Therefore, the total amount disbursed under this proposal would increase by 11.0% to 34.5 million euros from 31.1 million euros a year earlier. In addition, the Supervisory Board will submit a proposal to the Annual General Shareholders’ Meeting to elect Dr. Guido Oelkers to the Supervisory Board as a representative of the shareholders. Guido Oelkers has already been a member of this board since November 2017. He was appointed by court order after Supervisory Board member Professor Arnold Picot, Ph.D., had passed away. Guido Oelkers, who was born in 1965 and holds a university degree in business administr
ETECSA Enhances Connectivity to the Rest of the World with SES Networks20.2.2018 14:00 | Pressemelding
Cubans and visitors to Cuba will have additional access to reliable and uninterrupted connectivity throughout the main island of Cuba as ETECSA, Cuba’s national telecommunications operator, signed a deal with SES Networks for satellite services, SES announced today. This press release features multimedia. View the full release here: http://www.businesswire.com/news/home/20180220005894/en/ ETECSA Enhances Connectivity to the Rest of the World with SES Networks (Photo: Business Wire) SES Networks will augment ETECSA’s existing terrestrial infrastructure with its high-performance fibre-like medium earth orbit (MEO) capacity and improve connectivity for end-customers of the Cuban operator. “By working with SES Networks, we are ensuring that our customers across the main island will have a new way to access high-performing Internet at all times through this innovative satellite system. Our collaboration with SES Networks highlights ETECSA’s mission of providing telecommunications services t