portfolio share

Investors pad multifamily’s portfolio share

Friday, August 16, 2019

Multifamily assets have enjoyed the most growth in real estate portfolio share of any property type thus far in the 21st century. Data from the MSCI global property index shows that multifamily properties jumped from 11 per cent of investment allocation in 2001 to 17 per cent at the end of last year.

Conversely, allocations to office and retail properties each slipped by 7 per cent. Together, the two property types accounted for more than three-quarters of the capital value of the index in 2001, but have since dropped to a 63 per cent combined portion.

Bryan Reid, MSCI’s vice president, global real estate research, attributes the shift both to the dynamics of commercial real estate markets and to increasing allocations to the real estate asset class in general, which has prompted investors to diversify their holdings.

The recent see-saw trajectories of retail and industrial performance is well chronicled, with E-commerce fingered as a destabilizing force for retail and a driver of growth in warehouse/distribution space. The index allocation to industrial properties has also increased by 4 per cent since 2001, while 2 per cent growth in a grouping of property types collectively dubbed “other” is linked to investors’ search for yield and fervent competition for institutional grade real estate product.

Student housing, childcare centres, healthcare facilities, data centres and hotels are examples of the more niche investments that have increased in popularity,” Reid notes.

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