Cornell University’s Baker Program in Real Estate and Hodes Weill & Associates are pleased to present the findings of the ninth annual Institutional Real Estate Allocations Monitor (the “2021 Allocations Monitor”). The 2021 Allocations Monitor focuses on the role of real estate in institutional portfolios, and the impact of institutional allocation trends on the investment management industry.  Launched in 2013, the Allocations Monitor is a comprehensive annual assessment of institutions’ allocations to, and objectives in, real estate investments.  This report analyzes trends in institutional portfolios and allocations by region, type and size of institution.


The 2021 Allocations Monitor includes research collected on a blind basis from 224 institutional investors in 37 countries.  The 2021 participants hold total assets under management (“AUM”) exceeding US$13.4 trillion and have portfolio investments in real estate totaling approximately US$1.2 trillion.  Our survey consisted of 23 questions concerning portfolio allocations to the asset class, current and future investments in real estate, investor conviction, investment management trends and the role of various investment strategies and vehicles within the context of the real estate allocation (e.g., direct investments, joint ventures and private funds). We also included questions regarding historical and target returns as well as environmental, social and governance (“ESG”) policies.


  1. While the growth in target allocations remained moderate year-over-year, institutions expect to increase allocations at a faster pace over the next 12 months. Average target allocations increased to 10.7% in 2021, up 10 bps from 2020 and up 180 bps since we began the Allocations Monitor survey in 2013. The rate of increase has held steady for the third straight year and compares to an annual range of 20 bps to 40 bps between 2013 and 2018. Institutions are expecting to increase target allocations by 30 bps over the next 12 months, to an average of 11.0%. 

  2. Institutional portfolios are under-allocated to real estate by the widest margin over the past seven years, resulting in an acceleration of capital flows to the sector. Institutions report a margin between actual and target allocations of 140 bps, up meaningfully from 60 bps in 2020 and as compared to a range of 60 bps to 110 bps since 2015. This can be attributed to a slowdown in the pace of capital deployment for several quarters in mid-2020 following the onset of the COVID-19 pandemic, and the denominator effect, as public equities are at or near all-time highs and other asset allocations, including private equity and venture, have delivered outsized returns. The level of under-investment, coupled with rising investor sentiment, is accelerating capital flows to the sector.

  3. Portfolio investment returns under-performed long-term targets in 2020; but investors remain optimistic for 2021 as valuation metrics climb to all-time highs. As property markets experienced volatility and in some cases devaluation in 2020, portfolio returns dipped to 5.9%. This represents the lowest reported returns over the past nine years and the first year that actual returns trailed target returns of 8.2%. Institutions are reporting a strong bounce-back in returns in 2021, as economies re-open and operating fundamentals are showing strength. 

  4. Investor sentiment increased to a nine-year high, and investors remain bullish about the opportunity to deploy capital. Between 2020 and 2021, our “Conviction Index”, which measures institutions’ view of real estate as an investment opportunity from a risk-return standpoint, increased from 5.9 to 6.5, the highest sentiment since we began the survey in 2013.  Positive investor sentiment can be attributed to strong operating fundamentals in certain sectors including industrial, multifamily and niche property sectors such as life sciences and data centers. The view that there is, or will be, an opportunity to invest in certain sectors or markets that are experiencing distress or dislocation is also driving investor conviction.

  5. Cross border capital flows remain strong, and the percentage of institutions investing outside of their domestic region is on the rise. In 2020, institutions reported a preference to invest close to home in the face of uncertainty following the onset of COVID-19. The long-term trend towards rising cross border investments has returned, as institutions report increased appetite to allocate to strategies outside of their domestic regions. The U.S. remains the preferred destination for international capital flows, followed by continental Europe. Institutions in APAC remain significantly underinvested relative to target allocations and are expected to be very active deploying capital globally over the coming years.

  6. A growing number of institutions are outsourcing real estate portfolio investments to third party managers. Approximately 70% of institutions report outsourcing their entire real estate portfolio to third party managers, a seven percentage point increase from 2021. Investors continue to favor allocating capital to existing manager relationships, with 65% of 2021 investments expected to be allocated to groups with which the institution has a pre-existing relationship. The continued allocation of capital to third-party managers, coupled with appreciating values and income reinvestment, is driving double-digit AUM growth for the asset management industry.

  7. Higher return value add and opportunistic strategies remain the strong preference coming out of the COVID-19 pandemic, with US-based institutions showing the greatest appetite for risk. Investors continue to demonstrate appetite for higher return strategies, with a particular objective of taking advantage of emerging distress and dislocation in the markets. Approximately 92% of institutions report that they are actively allocating capital to value add and/or opportunistic strategies in 2021.

  8. ESG continues to be a major focus of investors, led by institutions in Europe and Australia. The importance of ESG in institutional portfolios continues to grow, and investment managers are positioning their organizations and operating practices to accommodate their clients’ objectives. With over 50% of institutions now reporting that they have an ESG policy, ESG is moving from a “nice to have” to “have to have” for managers and their institutional clients.

Media Coverage



Participation Rate

US$13.4 Trillion
Total Assets

US$1.2 Trillion
Real Estate Assets

Institutions with AUM
in excess of US$50bn

If you are interested in receiving previous copies of the Allocation’s Monitor, please email

2020 Institutional Real Estate Allocations Monitor
2019 Institutional Real Estate Allocations Monitor
2018 Institutional Real Estate Allocations Monitor
2017 Institutional Real Estate Allocations Monitor
2016 Institutional Real Estate Allocations Monitor
2015 Institutional Real Estate Allocations Monitor
2014 Institutional Real Estate Allocations Monitor
2013 Institutional Real Estate Allocations Monitor