RESEARCH

INSTITUTIONAL REAL ESTATE ALLOCATIONS MONITOR

Cornell University's Baker Program in Real Estate and Hodes Weill & Associates are pleased to present the findings of the seventh annual Institutional Real Estate Allocations Monitor (the "2019 Allocations Monitor"). The 2019 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 2019 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 2019 Allocations Monitor includes research collected on a blind basis from 212 institutional investors in 24 countries. The 2019 participants hold total assets under management ("AUM") exceeding US$12.3 trillion and have portfolio investments in real estate totaling approximately US$1.1 trillion. Our survey consisted of 24 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, private funds). We also included questions regarding historical and target returns as well as environmental, social and governance ("ESG") policies.

2019 Allocations Monitor.jpg
KEY FINDINGS OF THE 2019 ALLOCATIONS MONITOR

  1. Target allocations to real estate continue to rise globally, although pace of year-over- year growth is moderating

  2. Led by institutions in the Americas and Asia Pacific, growth in target allocations is forecasted to continue in 2020 

  3. While institutions have been actively investing in real estate, the “denominator effect” continues to contribute to portfolios lagging target allocations 

  4. While actual investment returns declined moderately in 2018, results continue to outpace target returns

  5. Investor sentiment increased for the second straight year, reaching a 5-year high 

  6. Allocations to third-party managers continued to trend upward in 2019, driving double-digit growth in global AUM for fund managers

  7. Value add strategies remain the strongest preference for institutions globally, while interest in opportunistic strategies declined for the first time in five years

  8. While cross-border capital flows remain strong, the percentage of institutions investing outside of their domestic region has decreased

  9. Closed- and open-end private funds remain the preferred investment products for institutions, but popularity has declined slightly after several years of growth

  10. ESG policies are increasingly important for institutions, and investment managers are positioning their organizations and product offerings to accommodate their clients’ objectives

Media Coverage
Archive

212
Institutions

US$12.3 Trillion
Total Assets

24
Countries

US$1.1 Trillion
Real Estate Assets

7%
Participation Rate

41
Institutions with AUM
in excess of US$50bn

If you have any comments or suggestions regarding this year's Allocations Monitor, please feel free to email us at info@hodesweill.com.

More information on Cornell University's Baker Program in Real Estate and the Allocations Monitor can be found at the following website.

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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.