The Implications for Regional Investment of Diversification Strategies in Commercial Real Estate Portfolios
نویسندگان
چکیده
A number of studies have examined the benefits of regional diversification strategies within commercial real estate portfolios with two approaches adopted; the first is based on primary contiguous geographical regions while the second employs areas based on economic function. In general, the conclusion is that diversifications strategies based on simple geographical areas adds little, if anything, while economic based regions have shown much greater potential. The economic regions approach to portfolio analysis appears to be a much more valuable tool in evaluating regional real estate investment opportunities and risks. The reason is that this method allows consistent risk measurement between aerial units and enables the portfolio manager to develop a geographically diversified portfolio through the use of economically cohesive regions. The aim of this paper is therefore to identify how the application of geographic real estate diversification strategies in the UK determines the flows of funds coming into regions, and the consequent impacts on regional investment in the regional built environment.
منابع مشابه
Spatial Statistics Applied to Commercial Real Estate
Portfolio theory shows that diversification can enhance the riskreturn trade-off. This study uses the absolute location of commercial real estate property along with spatial statistics to address the inherent problem of determining geographical diversification based upon a set of economic and property-specific attributes, some of which are unobservable or must be proxied with noise. We find tha...
متن کاملAnalysis the Effects of Tax in the Real Estate and Housing Sector and Estimating its Potential Capacity in Iran with Emphasizing on Strategies and Challenges
In designing the tax system in the housing and real estate sector, increasing the efficiency and optimal allocation of resources in the urban area, redistribution of income and wealth, reducing the incentive for speculation and increasing tax revenues of national and local governments should be considered. Accordingly, with the expansion of tax bases and reduction of exemptions, it is possible ...
متن کاملDiversification in Commercial Real Estate: Realizing Continuous Spatial Correlation
In a mean-variance state investment managers must thoroughly specify portfolio risk to obtain full diversification and select investment options on the efficient frontier. However, diversification within real estate is not as costless as other financial assets such as stocks or bonds. The local nature of real estate implies that investment managers may need to specialize for simplicity or by po...
متن کاملThe Effect of Geographic Diversification on the Returns of Real Estate Investment Trusts
In analyzing the effect of geographic diversification on the risk and volatility of real estate returns, past studies have suffered from several flaws. They have been performed on ex post portfolios constructed from a larger sample of properties, they have used appraisal-based return series, and the geographic regions analyzed did not bear any relation to the economic characteristics which unde...
متن کاملThe Present Value Model with Time-Varying Discount Rates: Implications for Commercial Property Valuation and Investment Decisions
Questions of investment "timing" and the possibility that real estate returns may be somewhat predictable have recently moved to the forefront of the concerns facing institutional investors in real estate. This is largely a consequence of the experience of many investors who made substantial property investments during the mid 1980s, only to see these assets lose much of their value when the pr...
متن کامل