Real Estate

Real Estate is a far more complex asset class than many institutional investors may realize. We offer insights into a range of real estate research topics to deepen the understanding of investment performance, portfolio construction and risk.  Our real estate asset level data provides the basis for our research on market performance, and the fund level data enables an improved understanding of global unlisted vehicle performance. Our research helps to provide investors, managers and advisers with objective insight throughout the investment process.

 

Source: MSCI

 

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FEATURED RESEARCH PAPERS AND Blog posts



BRICK BY BRICK: ASSET-LEVEL UNDERWRITING IN REAL ESTATE

Blog Post: Due to the private nature of real estate, investors are often faced with making decisions based on broad market-level information or data relating to a rarified class of hypothetical, top-quality, perfectly located, “prime” benchmark properties, which, much like Peter Pan, never age. But determining underwriting assumptions for individual properties requires greater specificity.


FOR REAL ESTATE, ALL RATE RISES ARE NOT CREATED EQUAL

Blog Post: A decade after the global financial crisis, the era of ultra-low interest rates may be drawing to a close. Many real estate investors worry that rising rates could hurt their portfolios. However, our analysis suggests it’s the macroeconomic fundamentals driving interest rates, not the rise itself, that are most important.


HOW E-COMMERCE IS RESHAPING THE FUTURE OF RETAIL PROPERTIES

Blog Post: Although e-commerce has disrupted industries once considered staples in retail properties, certain retail assets are thriving. Simply put, some goods and services cannot be purchased over the internet: Working out at a fitness center or dining at a restaurant cannot be replicated by online transactions. And while some companies sell groceries online, most food shopping still takes place in stores. Our findings show that experience-oriented tenants, such as movie theaters and restaurants, and internet-resistant retailers, such as supermarkets, dominated the top-performing retail assets in 2017.


GLOBAL GATEWAY CITIES: THE PERFORMANCE BEHIND THE HYPE

Blog Post: Since the Global Financial Crisis, real estate investors have turned to Global Gateway Cities as a key way to diversify portfolios and to generate capital growth. The conventional wisdom asserts these large, well connected and economically dynamic cities should provide more liquidity and more stable cash flows than those available from secondary markets. But have these cities, which include London, New York and Tokyo, offered the superior and safer investments to justify their premium pricing?


IDENTIFYING OVERLOOKED OPPORTUNITIES IN GLOBAL GATEWAY CITIES

Blog Post: Increasingly, institutional investors with international strategies tend to concentrate their search for attractive property investments in established Central Business Districts (CBDs) within “global gateway cities,” such as New York, London and Hong Kong.


UNDERSTANDING THE TRUE RISK OF REAL ESTATE ASSETS

Blog Post: When developing investment strategies, institutional investors in private real estate tend to rely on market-level performance data. But many real estate investors know that every asset is different and even two seemingly identical assets in the same area can produce very different returns. How can they better understand the true risk underlying their exposures when developing their strategies?


BUILDING TARGETED REAL ESTATE PORTFOLIOS

Research Paper: Investors often target certain markets when executing their allocation strategies. However, differences between individual properties and high asset-specific risk mean that holding just one or two assets is not usually sufficient to replicate the market. This paper — which uses an example of an investor targeting specific global office markets — shows that a representative exposure could have been achieved with portfolios approaching 10 assets in size. Most of the reduction in tracking error comes from the first few assets acquired, but investors should be aware that the number of assets needed to approach market exposure can vary from market to market.


RETAIL APOCALYPSE: SHOULD MALL OWNERS BE WORRIED?

Research Paper: Retailer bankruptcies, department store struggles and empty malls have dominated recent U.S. retail news headlines. The apparent culprit? A mass movement to online shopping. The “retail apocalypse” has led to fears of consumers abandoning physical bricks-and-mortar stores in favor of online shopping. In this paper, we use MSCI data to illustrate that, despite the inexorable rise of e-commerce over the last 20 years, retail asset performance in the U.S. has been surprisingly resilient, providing stable returns and operating metrics. All the same, the changing retail environment means portfolios must be well managed to be positioned for the transition underway.

Introducing the 11th GICS® Sector: Real Estate

Modern Index Strategy Webinar Series.
What does adding real estate as a new GICS sector mean to your portfolio?

MSCI U.S. Real Estate Investment Conference

MSCI exclusively invites you to join us for the seventh annual MSCI U.S. Real Estate Investment Conference in New York on May 10, 2018.

Is your real estate portfolio resilient enough?

Amid recent worldwide political, economic and market uncertainty, how can you increase resilience of your real estate portfolio?