Global Puzzle: Investors Strive to Put the Pieces Together
Nearly two-thirds of investable commercial real estate stock lies outside the United States, and these international markets are more accessible than ever. As pension funds see yields start to wane in the domestic real estate market, they will continue to wade ever deeper into the global markets. With varied investment strategies and investment vehicles, the opportunities are great, yet so are the risks. So how do sophisticated investors navigate the options?
As data proliferated in the 1990s and REITs and CMBS markets developed, U.S. investors in the domestic market were able to apply quantitative models to their research. While it became possible to develop quantitative models domestically, the ability to construct quantitative models varies in global markets because available historical data is often hit or miss. Some European countries have significant historical data; most developing and emerging markets have very little. So what are the appropriate analytical m