Source: Business Plus —
Institutions continue to increase target allocations to real estate, with the expectation that attractive buying opportunities will emerge over the next several years.
That’s according to the 10th annual Institutional Real Estate Allocations Monitor, published by Hodes Weill & Associates and Cornell University’s Baker Program in Real Estate.
This comes despite the fact that economic turmoil, geopolitical risk, and rising inflation and interest rates have contributed to the first decline in institutional investor confidence in real estate in five years.
Decreased conviction coupled with portfolio overallocation has resulted in a slowdown of deployment pacing. But the report finds that while today’s investment environment is challenging, institutions are expecting to increase allocations to real estate by 30 basis points to 11.1% in 2023.
The findings are based on responses from 173 institutional investors from 34 countries that own real estate assets valued at c.$1.1 trillion.
The decline in investor confidence noted in the survey’s Conviction Index reflects a cautious view of the market, which has contributed to the slowdown in capital flows and transaction volumes seen over the course of this year.
The index has declined from a ten-year high of 6.5 in 2021 to 6.0 in 2022.
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