10 reasons to invest in European listed real estate

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Editions

1. 10 reasons to invest in European listed real estate
2. 01 Diversification across asset classes adds value to a portfolio
3. 02 Yield spread and risk premium
4. 03 Listed real estate and interest rates
5. 04 Better quality assets
6. 05 Valuation is attractive compared to direct real estate
7. 06 Lower sector volatility
8. 07 Correlation with direct real estate is what investors want and what the sector offers
9. 08 Opportunity to diversify across countries, regions and subsectors
10. 09 Listed real estate is a solid inflation hedge
11. 10 More efficient and liquid than direct real estate

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Diversification across asset classes adds value to a portfolio

Adding listed real estate to a diversified portfolio of assets improves its overall efficiency. This better risk return of the portfolio is confirmed by efficient frontier studies. The optimal percentage of listed real estate depends on a number of factors, but it is typically between 3 and 10%.

As these studies are concluded over a cycle, it is implied that timing an investment in listed real estate is of lesser importance than actually owning the assets. The timing issue sometimes prevents investors from starting to invest, while in fact the most important decision is to invest in the first place and understand the value of including listed real estate in a global portfolio of assets.