Housing investment in an institutional portfolio context

Montezuma, Joaquim

doi:10.1108/02637470410545011

Cited by 9 publications

(5 citation statements)

References 42 publications

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“…Empírica) studies regarding the role of residential property in mixed asset portfolios suggest that direct residential property not only generates risk-adjusted retums comparable to those on bonds and shares, but also provides low correlations with shares, bonds and non-housing property ( e.g. lbbotson and Siegel, 1984;Hoesli and Hamelink, 1997;and Montezuma, 2004).…”

Section: Introductionmentioning

confidence: 99%

A Survey of Institutional Investors' Attitudes and Perceptions of Residential Property: The Swiss, Dutch and Swedish Cases

Montezuma¹

2006

Housing Studies

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This paper provides evidence about institutional investors' altitudes and perceptions of residential property as an investment assei group in three European countries (Switzer/and, the Nether/ands and Sweden). These countries stand out, with an extraordinari/y large institutional residentia/ ownership, in fac/, residentia/ institutiona/ a//ocation represents about 6%, 2% and 3% of the total institutional investment in the Switzerland, the Nether/ands and Sweden respective/y. Housing is the most important institutional property assei type in Switzerland and the Netherlands, comprising over 52% and 50% of their institutional property portfolios respective/y. ln Sweden residential property plays an important, but not dominant role in the domestic institutional property portfo!ios, representing about 21 % of the institutional property holdings. Using a postal survey of representatives of pension funds, insurance companies, property investment and assei management companies the study analyses the attractiveness of residential property in terms of institutional investment goals. The survey examines the institutional investors' perceptions of housing investment, namely with respect to its returns, vo/ati/ity, iriflation hedging, liabi/ities matching and correlation with shares, bonds and non-residenfial property. Additiona//y, the survey /ooks at the institutional investors' experiences regarding the priva/e rented sector.

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Section: Introductionmentioning

confidence: 99%

A Survey of Institutional Investors' Attitudes and Perceptions of Residential Property: The Swiss, Dutch and Swedish Cases

Montezuma¹

2006

Housing Studies

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“…The perceived financial performance of residential property in South Africa, which is considered to be a key cause of the low uptake of residential stock, is inaccurate. Many participants highlighted that residential property could outperform other property sectors, which was supported by research conducted in Australia and the UK that revealed residential property could deliver high risk-adjusted returns and add value within a multi-sector portfolio (Montezuma, 2004;Lee, 2008). This suggests that the expertise regarding residential property investment, even amongst the upper management of listed funds, is lacking.…”

Section: Discussionmentioning

confidence: 99%

Investigation into the Relatively Low Uptake of Residential Stock within South African Real Estate Investment Trusts

Nurick

Boyle²,

Morris³

et al. 2018

JARER

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Since the establishment of the first South African Real Estate Investment Trust (REIT) in 2013, the listed property sector has seen significant growth with a current market capitalisation of R400 billion in comparison to 1998 where the market capitalisation was R5 billion. However, South African REITs invest less in the residential sector when compared to the global REIT market. The purpose of this research was to determine the factors that have attributed to this low uptake of residential stock. This was achieved using a qualitative survey consisting of semi-structured interviews with listed property fund managers and upper management from four REITs listed on the South African stock exchange. The findings indicated a number of factors that have influenced the low uptake of residential stock. These have been identified as the financial performance of residential real estate in South Africa, the nature of residential real estate, and the maturity of the REITs sector in South Africa. These findings make a valuable contribution to the very limited literature on REITs in South Africa. Furthermore, understanding these factors is crucial in further developing the REITs sector in South Africa which has the potential to catalyse broader developments for housing and the economy.

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“…Recent studies in housing scholarship have taken contrasting positions on earlier studies by asserting that residential property is riskier than other assets (e.g. Berry & Hall, 2005;Milligan et al, 2015;Montezuma, 2004Montezuma, , 2006. This assertion is often made when the risk-return profile of rental housing investment is being discussed.…”

Section: Low Profitabilitymentioning

confidence: 99%

Barriers to Institutional Investment in Rental Housing: A Systematic Review of Market Risks

Swanzy-Impraim

Mangioni

2021

INTREST

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Housing practitioners and policy experts are advocating for an expansion in rental housing supply in contemporary cities around the world. The objective is to convince institutional investors to include rental housing investment in their investment portfolio to contribute to boosting housing supply. Unfortunately, the rental sector is characterized by numerous uncertainties and challenges, making it unattractive to institutional investors. With the growing attention to institutional investors in various housing market contexts, an understanding of the market risks (also known as barriers), is useful to inform future research and policymaking. Using a systematic literature review methodology, this paper synthesizes the extant literature on the market risks inhibiting institutional investment in rental housing. Findings reveal the following barriers: low profitability, non-progressive rent control policies, unclear target group for rented projects, poor landlord-tenant relations, inadequate property management and unreliable property market information. Among all the barriers identified, low profitability and inadequate property management had great influence on their investment decision. Firstly, institutional investors perceive rental housing investment as less profitable and unattractive in terms of project performance. Secondly, the lack of supporting structures for the property management sector contributes to derailing rental yields. The review also finds that the target group for rental projects are often vague especially for projects under government assistance. The rental sectors in many countries are confronted with numerous problems, some of which greatly inhibit institutional investors from investing in the rental asset. This paper concludes that, although the idea of expanding rental housing supply seems laudable, ignoring these problems may be detrimental to housing markets in the long run. Rental markets in many countries are volatile, and thus not ready to receive institutional investors fully into the sector. An expanded rental sector could be advanced if policy makers take the appropriate steps to resolve the identified challenges. Adequate structural preparations must also be made for large scale rental housing supply.

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Housing investment in an institutional portfolio context

Cited by 9 publications

References 42 publications

A Survey of Institutional Investors' Attitudes and Perceptions of Residential Property: The Swiss, Dutch and Swedish Cases

A Survey of Institutional Investors' Attitudes and Perceptions of Residential Property: The Swiss, Dutch and Swedish Cases

Investigation into the Relatively Low Uptake of Residential Stock within South African Real Estate Investment Trusts

Barriers to Institutional Investment in Rental Housing: A Systematic Review of Market Risks

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