Institutions continue to increase target allocations to real estate, with the expectation that attractive buying opportunities will emerge over the next several years, according to the 10th annual Institutional Real Estate Allocations Monitor, published by Hodes Weill & Associates and Cornell University’s Baker Program in Real Estate.

This comes despite economic turmoil, geopolitical risk, and rising inflation and interest rates contributing to the first decline in institutional investor confidence in real estate in five years. Decreased conviction, coupled with portfolio overallocation, has resulted in a slowdown of deployment pacing. But while today’s investment environment is challenging, institutions are expecting to increase allocations to real estate by 30 basis points to 11.1 percent in 2023.

Real estate has continued to outperform target expectations in institutional portfolios. On a trailing five-year basis, institutions have seen an average