Survey Says Increases in Real Estate Allocations, Investments for 2014

real estate allocationsWe’ve been talking about this new year with a lot of optimism. Fortunately, we’re not the only ones who feel this way. Some of this comes on 2013’s end with market participants pushing the S&P 500 to 16-year highs along with the Dow Jones Industrial Average hitting 18-year gains. Consumer confidence also concluded the year on a high note as well as real estate allocations.

With these trends pointing toward another good year, one area that we’re obviously happy to see included is a global movement by institutional investors to raise their alternative investment allocations in 2014. Most notably, in real estate and real assets. This has been revealed in a new global survey released by the investment firm BlackRock.

Survey Findings

After speaking with 100 institutional investors across the globe, the firm disclosed the following survey findings for 2014:

  • Approximately half of the respondents (49 percent) expect to increase their real estate allocations
  • More than 40 percent suggested they will raise their real asset investments
  • One third of the investors simultaneously plan to cut their cash holdings
  • Approximately 30 percent intend to raise their hedge fund allocations
  • More than 40 percent of American institutions will probably raise their hedge fund allocations (none are looking at decreasing contributions). While 35 percent from the EMEA (Europe/Middle East/Africa ) region will likely distribute less to hedge funds with just 20 percent allocating more.
  • Approximately one-third of those surveyed expect to allocate more to private equity

Building Better Portfolios

Robert Goldstein, Senior Managing Director and head of BlackRock’s Institutional Client Business and BlackRock Solutions, said in a press release about the survey, “Institutional investors are seeking to build portfolios better suited for an investment landscape characterized by low yields, sluggish growth, volatile markets, and rising correlation between stocks and bonds.”

He added, “Divergent economic and geopolitical conditions globally offer institutions a menu of real estate and real asset opportunities that meet a variety of investment objectives. In real estate, while core, income producing investments in developed markets are still in favor because of their liquidity and safe cash flows, we anticipate that institutions looking for income-producing alternatives will turn their attention to more opportunistic real estate investments outside their home markets.”

We enthusiastically agree with the survey’s respondents. Accordingly, we are preparing for 2014 real estate opportunities. As we introduce the “Privilege Plan,” a Real Estate Investment Fund as an option to this expanding landscape. This fund is accessible to accredited investors seeking alternative investment opportunities.