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Laxman Pai, Opalesque Asia:

Institutional investors slow capital deployment into real estate due to overallocation, but continue to increase target allocations in anticipation of attractive buying opportunities over the next 12 to 24 months, said a study.

According to a Cornell University and Hodes Weill & Associates study, the slowdown in capital deployment comes from overallocation and decreased conviction, or consistency, in outperforming benchmarks.

The results come from the 2022 Institutional Real Estate Allocations Monitor, featuring 173 institutions from 34 countries representing aggregate assets under management of $11.1 trillion and portfolio investments in real estate of roughly $1.1 trillion.

The decline in investor confidence noted in the survey's "Conviction Index" - which measures institutions' view of real estate as an investment opportunity from a risk-return standpoint - reflects a cautious view of the market, which has contributed to the slowdown in capital flows and transaction volumes seen over the course of this year. The index declined from a ten-year high of 6.5 in 2021 to 6.0 in 2022.

Real estate has continued to outperform target expectations in institutional portfolios. On a trailing five-year basis, institutions have seen an average annual return of 9.9%, significantly ahead of the average target return benchmark of 8.2%.

Following underperformance in 2020, institutional real estate portfolios bounced back in 2021, generating an ......................

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