Global investors’ real estate allocation has topped 10% for the first time, according to a study by Cornell University.
Joe Valente, head of European real estate research, JP Morgan asset management, said, however, that institutional investors continued to fall short of their targeted allocations, by around 100bps. The Cornell study notes that this “reality gap” may increase if the equity market benefits from higher interest rates in the US forcing institutional investors to seek a new balancing act across multi asset portfolios.
Valente said: “Against this, however, we should also consider China’s new restrictions on outbound foreign investment, which were introduced in an effort to curb capital outflows. That’s put considerable downward pressure on the renminbi, which has fallen by 6% this year.
“At the least these new regulations are likely to involve more rigorous due diligence, which will lengthen the approval process. It could also mean that Chinese investors will seek a larger number of smaller deals, falling below the stipulated maximum investment amount, and focus once again on the larger, more transparent and liquid European markets.”
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