Hitting the mark

Demand for better representation of niche assets in benchmarks continues to grow, but delivering accurate sampling remains some way off.

The first official real estate benchmark was launched in 1982 in the United States — the NCREIF Property Index (NPI). With data going back to 1977, the appraisal-based index only covered four asset classes: office, retail, multifamily and industrial.

Today, those sectors remain the dominant players in most benchmark sampling, but their pre-eminence grows ever more anachronistic with each passing quarter, as investors continue to pay increasing attention to niche assets, such as data centres, self-storage and single family. In the minds of many investors, this has created an imbalance in indices that needs urgent addressing.

As one US-based investor, who wishes to remain anonymous, told IREI earlier this year, he and his peers are finding the lack of a relevant benchmark for “other” property types a gnawing frustration. �