Publications

- March 1, 2020: Vol. 12, Number 3

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Emerging trends: 2020 may be a watershed year for how investors think about real estate as an asset class

by Will Robson

Will building skyports for flying cars become the latest must-have feature for luxury residential buildings? Will there be human settlements on Mars? Despite decades-old predictions about what 2020 may look like, it doesn’t appear they will revolutionise real estate anytime soon. Certain trends, however, have impacted real estate in the near term, such as climate risk and improved data availability, suggesting this year may be a watershed year for the way investors think of real estate as an asset class.

Real estate has evolved from a relatively small, insignificant and difficult-to-understand element of multi-asset-class portfolios, which traditionally have been dominated by equities and fixed income, into a larger part of institutional portfolios. Combined with the shift to index-based equity portfolios, real estate’s relative contribution to total active risk and running costs has come under increased scrutiny.

Thus, understanding what drives risk and return in

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