Investors Ramp Up Allocations, Favor High-Yield Strategies: The Annual Plan Sponsor Survey
Real estate allocations are higher. Return expectations are lower. Capital flows will decline. Foreign investments will increase. Medical office and apartment properties are hot; retail is not. Those are just a few of the findings of Tax-Exempt Real Estate Investment 2008,the 12th annual plan sponsor survey conducted by Institutional Real Estate, Inc. (IREI) and San Francisco–based research and consulting firm Kingsley Associates.
Despite an air of uncertainty created by tightening credit markets and a slumping economy, real estate has maintained its high ranking among tax-exempt investors. In today’s low-return investment environment, plan sponsors remain attracted to the asset class’ competitive risk-adjusted returns and its current yield component, as well as real estate’s proven role as a diversifier within a multi-asset portfolio. For these reasons, pension fund capital flows to the asset class are expected to remain strong in 2008.