Change search
ReferencesLink to record
Permanent link

Direct link
Direct and Indirect Real Estate in a Mixed-asset Portfolio : Is direct or indirect preferable
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management.
2012 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

Studies carried out during the 2000’s have shown that securitized real estate has outperformed the direct real estate market with as much as up to 500 basis points on an annual basis during the 80’s and 90’s. Allocation to real estate among institutional investors has at the same time been at around 5%. Research conducted in the area during this period has suggested an allocation to real estate around 10% - 20% in a mixed-asset portfolio, depending on the specifics of the real estate.

Securitized and direct real estate come with different benefits and different problems, such as a better inflation hedge and asset-liability frameworks but worse information transparency for direct real estate, but a higher liquidity, return (including volatility) and information transparency for securitized real estate market.

This research shows that during the period 2000-2010 securitized real estate still outperforms direct real estate. The spread during the period is as much as 762 basis points per annum. The highest risk-adjusted return is given to the investor who invests between 21% - 30% depending on the specifics of the real estate. However, noticeable is that risk factors such as illiquidity, lower transparency and geographical could eventually give another perspective on the outcome of the risk-adjusted return.

Place, publisher, year, edition, pages
2012. , 38 p.
Keyword [en]
Modern portfolio theory, Mixed-asset portfolio, Diversification benefits
National Category
Civil Engineering
URN: urn:nbn:se:kth:diva-102185OAI: diva2:551306
Subject / course
Educational program
Master of Science - Real Estate Management
Available from: 2012-09-10 Created: 2012-09-10 Last updated: 2012-09-10Bibliographically approved

Open Access in DiVA

fulltext(378 kB)3006 downloads
File information
File name FULLTEXT01.pdfFile size 378 kBChecksum SHA-512
Type fulltextMimetype application/pdf

By organisation
Real Estate and Construction Management
Civil Engineering

Search outside of DiVA

GoogleGoogle Scholar
Total: 3006 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

Total: 342 hits
ReferencesLink to record
Permanent link

Direct link