Real estate allocations and confidence rise despite COVID-19 disruption

Real estate allocations and institutional investor confidence in the asset class have both risen this year, despite the uncertainty and disruption wrought by COVID-19, according to a report.

The eighth annual Institutional Real Estate Allocations Monitor survey by Hodes Weill & Associates and Cornell University found that investor sentiment rose for the third straight year in 2020.

Its “conviction index”, which measures institutional investors’ view of real estate from risk-return perspective, increased from 5.7 to 5.9.

The confidence comes off the back of strong performance: although the average real estate return among investors declined by 30bps in 2019, it remained above average target return of 8.3%.

Advisory firm Hodes Weill and Cornell University’s Baker Program in Real Estate surveyed 212 investors, owning some US$1.3trn (€1.06trn) real estate assets, for the report.

In recent years, the survey found that investors were meaningfully below their target allocations to real estate, but this year’s results suggest the gap is closing.

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