The erosion of the Real Estate home bias

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The appetite for international exposure across asset classes is demonstrated by surveys conducted by Towers Watson (for equities and bonds) and MSCI (for real estate). This work shows that the bias toward domestic investment is lowest for equities, but far higher for fixed income and for real estate. It may be logical for fixed income to have a relatively strong home bias given its role in hedging domestic liabilities, but this appears somewhat less intuitive for domestic real estate as a hedging asset.

Despite this home bias, a range of recent studies, including the ones cited above, point to an increasing appetite for foreign real estate, driven by concerns over the aggressive pricing of domestic markets, particularly in the US, Canada and Australia; as well as by the diversification benefits. These benefits have been complemented by the increasing options for investing in real estate internationally, with a series of more robust and better-governed investment platforms covering most of the world’s real estate markets.

Source : MSCI - IPD

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Mots-clés : MSCI - IPD