{"id":1004275154,"date":"2018-10-29T05:06:19","date_gmt":"2018-10-29T13:06:19","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004275154"},"modified":"2020-02-25T01:40:03","modified_gmt":"2020-02-25T09:40:03","slug":"global-cre-allocations-rise-but-still-lag-targets","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/global-cre-allocations-rise-but-still-lag-targets\/","title":{"rendered":"Global CRE Allocations Rise, But Still Lag Targets"},"content":{"rendered":"

By Scott Baltic, Contributing Editor <\/em><\/p>\n

\"Douglas<\/a>

Douglas Weill, managing partner, Hodes Weill & Associates<\/p><\/div>\n

Although the average target allocation to real estate among global institutional investors increased 30 basis points to hit 10.4 percent in 2018, with a further rise of 20 basis points forecast for the next 12 months\u2014and despite a rise in confidence\u2014\u201cinstitutions remain meaningfully under-invested in real estate<\/em>,\u201d according to Hodes Weill & Associates\u2019 and Cornell University\u2019s sixth annual Institutional Real Estate Allocations Monitor<\/a>.<\/p>\n

The survey examines both how the world\u2019s major institutional investors allocate investments to real estate and their sentiment toward the asset class.<\/p>\n

Target allocations broke the 10 percent threshold for the first time just last year, and they continued to climb, especially among EMEA (Europe, the Middle East and Africa) and APAC (Asia-Pacific) institutions.<\/p>\n

\u201cInterestingly, while the U.S. is still the preferred destination for investment<\/a>, institutions are increasingly favoring investments in Europe and Asia as attractive opportunities in the U.S. become harder to find<\/em>,\u201d Douglas Weill, managing partner at Hodes Weill & Associates, said in a prepared statement.<\/p>\n

\u201cInstitutional real estate portfolios delivered solid investment returns in 2017<\/em>,\u201d added Dustin Baker, director of the Baker Program in Real Estate at Cornell University. \u201cReturns continue to outperform expectations, which is likely contributing to the increase we are seeing in investor conviction. This has in turn led to an acceleration in transaction volumes and capital deployment across regions<\/em>.\u201d<\/p>\n

Among survey participants, insurance companies and public pension entities increased their target allocations by 50 and 30 basis points, respectively. The former have been seeking greater exposure to yield-producing real estate to match their liabilities. The growth on the public pension side was driven primarily by European pension plans, which increased target allocations by 70 basis points year-over-year.<\/p>\n

Meanwhile, with a 130 basis points decrease, endowments and foundations had the most significant year-over-year reduction in target allocations.<\/p>\n

While global CRE allocations continue to climb, although more slowly, the report found that institutions remain about 90 basis points under-invested relative to their target allocations. Insurance companies are on average the most under-invested, at 7.3 percent, while endowments and foundations are tracking comparatively closer to their target allocations.<\/p>\n

What this might mean here<\/h2>\n

So how could these findings, especially the estimates of relative under-investment in CRE, affect pricing and deal flow in U.S. real estate?<\/p>\n

\u201cTotal investable assets held by institutions are estimated at $80 to $100 billion, if not more. Ninety basis points of under-investment implies substantial capital is available for investment<\/em>,\u201d Weill told Commercial Property Executive<\/em>.<\/p>\n

\u201cWhile we are not suggesting that all of this capital will be put to work<\/em>,\u201d he continued, \u201cthis demonstrates that there is a continued weight of capital that should support transaction volumes and potentially asset pricing over the coming years<\/em>.\u201d<\/p>\n

The typical under-investment by institutions, Weill explained, \u201ccan be attributed to a few factors, including overall growth in investable assets held by institutions, as many asset classes have generated strong returns and appreciation over the past several years, as well as uncalled capital, or dry powder. Uncalled capital for real estate private funds is now in excess of $250 billion, which is a cyclical high<\/em>.\u201d  <\/p>\n

The 208 institutions that participated in the survey represent aggregate AUM of $11 trillion and portfolio CRE investments totaling about $1 trillion.<\/p>\n","protected":false},"excerpt":{"rendered":"

The latest annual survey by Hodes Weill & Associates and Cornell University examines how the world\u2019s major institutional investors allocate investments to commercial real estate, we well as their sentiment toward the asset class.<\/p>\n","protected":false},"author":882,"featured_media":1004275169,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21825,16,21783,23891,21742],"tags":[34452,36308],"class_list":["post-1004275154","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-finance","category-international","category-investment","category-national","category-latest","tag-cornell-university","tag-emea"],"acf":[],"yoast_head":"\nGlobal CRE Allocations Rise, But Still Lag Targets - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/global-cre-allocations-rise-but-still-lag-targets\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Global CRE Allocations Rise, But Still Lag Targets\" \/>\n<meta property=\"og:description\" content=\"The latest annual survey by Hodes Weill & Associates and Cornell University examines how the world\u2019s major institutional investors allocate investments to commercial real estate, we well as their sentiment toward the asset class.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/global-cre-allocations-rise-but-still-lag-targets\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2018-10-29T13:06:19+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-02-25T09:40:03+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/10\/Douglas-Weill.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Scott Baltic\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/global-cre-allocations-rise-but-still-lag-targets\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/global-cre-allocations-rise-but-still-lag-targets\\\/\"},\"author\":{\"name\":\"Scott Baltic\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/#\\\/schema\\\/person\\\/61ac1450f3ffaa0e850b834c28526555\"},\"headline\":\"Global CRE Allocations Rise, But Still Lag Targets\",\"datePublished\":\"2018-10-29T13:06:19+00:00\",\"dateModified\":\"2020-02-25T09:40:03+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/global-cre-allocations-rise-but-still-lag-targets\\\/\"},\"wordCount\":550,\"image\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/global-cre-allocations-rise-but-still-lag-targets\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/wp-content\\\/uploads\\\/sites\\\/46\\\/2018\\\/10\\\/Douglas-Weill.jpg\",\"keywords\":[\"Cornell University\",\"EMEA\"],\"articleSection\":[\"Featured\",\"Finance\",\"International\",\"Investment\",\"National\",\"News\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/global-cre-allocations-rise-but-still-lag-targets\\\/\",\"url\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/global-cre-allocations-rise-but-still-lag-targets\\\/\",\"name\":\"Global CRE Allocations Rise, But Still Lag Targets - 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