Market Information
A new approach to measuring real estate risk
Potential benefits from using actual cash flows
Real estate is playing an increasingly important role in investors’ portfolios. Between 2004 and 2016, the share of pension funds’ real estate investments grew from 3.4% to 9.0% (approximately $242.1 billion) of total assets globally (1).
Despite this growing allocation, real estate risk management remains patchy, unsystematic and lags the traditional asset classes of equities and fixed income. This situation is not unique to real estate but a general feature of alternative investments including infrastructure and private equity.
