There is a strong strategic case for geographic diversification within real estate allocations. But the compelling benefits of investing beyond familiar home markets are inevitably twinned with genuine complexities.
Nevertheless, investors can find a good balance between optimal diversification and manageable complexity when building a globally diversified real estate portfolio.
The investable global real estate market is valued at approximately US$12.5 trillion by MSCI, and it is far from homogeneous. Three distinct regional universes define the landscape: the Americas, which account for more than 40 percent of the total market; Europe, the Middle East and Africa (EMEA) at approximately 30 percent; and Asia Pacific at more than a quarter. Focusing on developed markets only narrows the universe marginally — from US$12.5 trillion to US$11.1 trillion — underlining that the bulk of investable stock is concentrated in a relatively small number of mature economies.
