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Real estate portfolio strategy and product innovation in Europe

Author

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  • Martin Hoesli
  • Jon Lekander

Abstract

Purpose - This paper aims to review major changes on real estate markets in Europe and to analyse the impacts of such changes. Design/methodology/approach - The paper provides an overview of the various equity real estate investment vehicles available to investors, with particular focus on the pros and cons of each type of vehicle. The paper also includes an analysis of the impacts of product innovation on real estate markets and on portfolio strategy. Findings - The changes on real estate markets have led to considerable amounts of capital being allocated to the asset class. Portfolio strategies should be substantially more flexible. Research limitations/implications - As many of the new products have been created in bullish real estate markets, it is important to assess the impacts of a market downturn on portfolio performance. Practical implications - A good understanding of available products with their pros and cons is necessary for a sound investment strategy. Originality/value - The paper is one of the very few papers that discuss the major institutional changes that have occurred on European real estate markets.

Suggested Citation

  • Martin Hoesli & Jon Lekander, 2008. "Real estate portfolio strategy and product innovation in Europe," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 26(2), pages 162-176, March.
    • Handle: RePEc:eme:jpifpp:v:26:y:2008:i:2:p:162-176
    DOI: 10.1108/14635780810857908
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    References listed on IDEAS

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    1. Gregory H. Chun & Brian A. Ciochetti & James D. Shilling, 2000. "Pension-Plan Real Estate Investment in an Asset-Liability Framework," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 28(3), pages 467-491.
    2. C.F. Sirmans & Elaine Worzala, 2003. "International Direct Real Estate Investment: A Review of the Literature," Urban Studies, Urban Studies Journal Limited, vol. 40(5-6), pages 1081-1114, May.
    3. Clayton, Jim & MacKinnon, Greg, 2003. "The Relative Importance of Stock, Bond and Real Estate Factors in Explaining REIT Returns," The Journal of Real Estate Finance and Economics, Springer, vol. 27(1), pages 39-60, July.
    4. Joseph L. Pagliari & Kevin A. Scherer & Richard T. Monopoli, 2005. "Public Versus Private Real Estate Equities: A More Refined, Long-Term Comparison," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 33(1), pages 147-187, March.
    5. Mei, Jianping & Lee, Ahyee, 1994. "Is There a Real Estate Factor Premium?," The Journal of Real Estate Finance and Economics, Springer, vol. 9(2), pages 113-126, September.
    6. Joseph Gyourko & Donald B. Keim, 1992. "What Does the Stock Market Tell Us About Real Estate Returns?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 20(3), pages 457-485, September.
    7. Youguo Liang & Arjun Chatrath & Willard McIntosh, 1996. "Apartment REITs and Apartment Real Estate," Journal of Real Estate Research, American Real Estate Society, vol. 11(3), pages 277-290.
    8. Joseph Gyourko & Donald B. Keim, "undated". "What Does the Stock Market Tell Us About Real Estate Returns? (Revision of 18-91) (Reprint 030)," Rodney L. White Center for Financial Research Working Papers 11-92, Wharton School Rodney L. White Center for Financial Research.
    9. Martin Hoesli & Jon Lekander, 2005. "Suggested vs. Actual Institutional Allocations to Real Estate: A Matter of Size?," ERES eres2005_196, European Real Estate Society (ERES).
    10. Pat Wilson & Ralf Zurbruegg, 2003. "International Diversification of Real Estate Assets - Is it Worth It? Evidence from the Literature," Working Paper Series 126, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    11. Martin Hoesli & Jon Lekander & Witold Witkiewicz, 2004. "New International Evidence on Real Estate as a Portfolio Diversifier," Journal of Real Estate Research, American Real Estate Society, vol. 26(2), pages 161-206.
    12. Martin Hoesli & Jon Lekander, 2005. "Suggested vs. Actual Institutional Allocattion to Real Estate in Europe: A Matter of Size," FAME Research Paper Series rp149, International Center for Financial Asset Management and Engineering.
    13. Terence Khoo & David Hartzell & Martin Hoesli, 1993. "An Investigation of the Change in Real Estate Investment Trust Betas," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 21(2), pages 107-130, June.
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    Cited by:

    1. Chyi Lee & Simon Stevenson & Ming-Long Lee, 2014. "Futures Trading, Spot Price Volatility and Market Efficiency: Evidence from European Real Estate Securities Futures," The Journal of Real Estate Finance and Economics, Springer, vol. 48(2), pages 299-322, February.

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