The Performance and Diversification Benefits of European Public Real Estate Securities

41 Pages Posted: 18 Apr 2006

See all articles by Shaun A. Bond

Shaun A. Bond

UQ Business School

John L. Glascock

University of Connecticut - School of Business - Center for Real Estate and Urban Economic Studies; European Business School

Date Written: March 2006

Abstract

This work analyzes the performance and diversification characteristics of European public real estate markets. There are three overall findings and one key observation. First, real estate has added significantly to overall portfolio outcomes in terms of increasing return and decreasing risk. Second, as found by others, real estate is a low beta investment and performs well during periods of market change - it was especially useful during the general market adjustment in 2000. Third, European real estate has performed very strongly since the 2000 stock market decline.

Finally, our assessment of why there is not more real estate in institutional portfolios requires an answer beyond examining just risk and return measures. This report will show that public real estate markets have provided strong performance for investors and warrant consideration for inclusion in institutional portfolios. Given these desirable characteristic it is likely that other features of the sector may have impacted on desired asset allocation (e.g liquidity, small market capitalisations, etc). Hence, the question of why institutions do not hold more real estate, is not about the attributes of return and risk per se, but about its legal form of ownership and the lack of market depth in terms of trading.

Keywords: real estate, diversification benefits, europe

JEL Classification: G11, R33

Suggested Citation

Bond, Shaun Alexander and Glascock, John L., The Performance and Diversification Benefits of European Public Real Estate Securities (March 2006). Available at SSRN: https://ssrn.com/abstract=896524 or http://dx.doi.org/10.2139/ssrn.896524

Shaun Alexander Bond

UQ Business School ( email )

The University of Queensland
Brisbane, QLD 4072
Australia

John L. Glascock (Contact Author)

University of Connecticut - School of Business - Center for Real Estate and Urban Economic Studies ( email )

Storrs, CT 06269
United States

European Business School ( email )

Gustav-Stresemann-Ring 3
Wiesbaden, Hessen 65189
Germany

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