Survey: Sagging confidence drives more RE capital into debt

While institutional sentiment fell for the fifth year in a row, allocations and closed-ended fund commitments to the asset class are still on the rise, a new report from Cornell University and Hodes Weill shows.

Institutional investors’ declining confidence in real estate is driving them to invest in debt products and other defensive strategies, according to the fifth annual “Institutional Real Estate Allocations Monitor” from Cornell University’s Baker Program in Real Estate and Hodes Weill & Associates.

In this year’s report, the investor conviction index dropped to 4.9, or “slightly pessimistic,” reflecting respondents’ views of the investment opportunity in real estate from a risk/return perspective on a scale of one to 10, with one being the least favorable and 10 being the most favorable. The low conviction rating represents a continuing decline from 6.4 to 5.4, or “moderately optimistic,” between 2013 and 2016.

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