Hitting the mark: Demand for better representation of niche assets in benchmarks continues to grow, but delivering accurate sampling remains some way off
Real estate benchmarking has been dogged by problems since its very inception.
Investors have commonly bemoaned a lack of transparency, sample degradation created by market changes, the ineffectiveness of risk measures and the rate at which data is updated — particularly when compared with benchmarks in other asset classes.
These problems were encapsulated in a major report by U.K.-based Investment Property Forum (IPF), which was published in late 2018.
The authors of Current Practices in Benchmarking Real Estate Investment Performance recognized the need to improve the sector’s use of performance yardsticks. “Looking to the future,” they wrote, “[we] believe that the challenge is to design a system that can cope with changing market conditions. It should also deliver a good balance between the measurement and attribution of performance that adequately captures risk and return combined with the position of the portfolio in the contemporary rea