Institutional investors plan to put more money into real estate next year, potentially lifting the number of deals, lending and property prices, a Cornell University survey shows.
“After several years of contraction following the global financial crisis, institutional investment in real estate is expected to grow substantially over the next decade,” according to the study, done by Cornell’s Baker Program in Real Estate and Hodes Weill & Associates LP, a New York-based property-investment adviser. “Investors are increasing their appetite for risk in an effort to seek higher returns.”
Institutions surveyed have an average of 8.8 percent of their assets in real estate, about 1 percentage point less than their targets, the survey showed. Those polled said they expect to increase their targets by about half a percentage point on average in 2014.
“This is particularly pronounced in Asia Pacific, where institutions expect to increase their target allocation by an average of 146 basis points,” according to the survey.
The Cornell study was based on responses from 198 institutional investors in 26 countries. They have a combined $7 trillion of assets under management, including more than $400 billion in real estate.
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