Three Decades of Global Institutional Investment in Commercial Real Estate

Alexander Carlo*, Piet Eichholtz, Nils Kok

*Corresponding author for this work

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Alternative assets represent an increasing share of pension fund assets, and real estate is a cornerstone of that allocation. This article investigates the trends in pension fund real estate investments over the past 3 decades, both in private and in public real estate, focusing on the performance of the asset class for the ultimate asset owners. The development of pension fund allocations to real estate differs across regions, with allocations increasing in Canada, stationary in the US, and shrinking in Europe. Slightly more than 10% of the real estate exposure is through publicly listed vehicles. Within the real estate portfolio, the authors observe a continuing increase in the use of external fund managers.
Investment costs are stationary, with pension funds in the US structurally paying more to their external private real estate managers than their peers in Canada and Europe. Costs relating to public real estate are more equal across regions. In terms of performance, the authors observe rather stable total returns for both private and listed real estate over the past 3 decades, contrasting volatile performance of private equity and infrastructure. Intermediated investment management for private real estate is costly, leading to disproportionately lower net returns.
Original languageEnglish
Pages (from-to)25-40
Number of pages16
JournalJournal of Portfolio Management
Issue number10
Publication statusPublished - 1 Oct 2021


  • Developed markets
  • Performance measurement
  • Pesion Funds
  • Real Estate

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