Institutional Perspectives on Real Estate Investing: The Role of Risk and Uncertainty

35 Pages Posted: 8 Jun 2005  

Ravi Dhar

Yale School of Management - International Center for Finance

William N. Goetzmann

Yale School of Management - International Center for Finance; National Bureau of Economic Research (NBER)

Date Written: June 2005

Abstract

In this paper we address the factors influencing the institutional decision to allocate resources to real estate. We survey a sample of major institutional investors via a web questionnaire. They were willing to answer questions about their target real estate allocation, their plans to increase or decrease their allocation, the major reasons for investing in real estate, and views on the major risks and relative expense of doing so. We find that the endowments in our sample typically had a relatively short history of real estate investment, but planned to increase their allocation to the asset class - more so than pension funds. We also find uncertainty about use of historical data to be a significant factor in the allocation choice.

Keywords: Behavioral Finance, real estate, investing, risk, uncertainty

JEL Classification: R33, G0, G23

Suggested Citation

Dhar, Ravi and Goetzmann, William N., Institutional Perspectives on Real Estate Investing: The Role of Risk and Uncertainty (June 2005). Yale ICF Working Paper No. 05-20. Available at SSRN: https://ssrn.com/abstract=739644

Ravi Dhar

Yale School of Management - International Center for Finance ( email )

Box 208200
New Haven, CT 06520-8200
United States

William N. Goetzmann (Contact Author)

Yale School of Management - International Center for Finance ( email )

165 Whitney Ave.
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-5950 (Phone)
203-436-9252 (Fax)

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