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Evaluating the Effectiveness of Common Structures in Property Portfolio Construction

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  • Steven Devaney

    (Department of Real Estate & Planning, University of Reading Business School)

Abstract

A good portfolio structure enables an investor to diversify more effectively and understand systematic influences on their performance. However, in the property market, the choice of structure is affected by data constraints and convenience. Using individual return data, this study tests the hypothesis that some common structures in the UK do not explain a significant amount about property returns. It is found that, in the periods studied, not all the structures were effective and, for the annual returns, no structures were significant in all periods. The results suggest that the drivers represented by the structures take some time to be reflected in individual property returns. They also confirm the results of other studies in finding property type a much stronger factor in explaining returns than regions.

Suggested Citation

  • Steven Devaney, 2003. "Evaluating the Effectiveness of Common Structures in Property Portfolio Construction," Real Estate & Planning Working Papers rep-wp2003-13, Henley Business School, University of Reading.
    • Handle: RePEc:rdg:repxwp:rep-wp2003-13
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    File URL: http://www.reading.ac.uk/LM/LM/fulltxt/1303.pdf
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    References listed on IDEAS

    as
    1. Glenn R. Mueller, 1993. "Refining Economic Diversification Strategies for Real Estate Portfolios," Journal of Real Estate Research, American Real Estate Society, vol. 8(1), pages 55-68.
    2. Mark Andrew & Steven Devaney & Stephen Lee, 2003. "Another Look at the Relative Importance of Sectors and Regions in Determining Property Returns," Real Estate & Planning Working Papers rep-wp2003-14, Henley Business School, University of Reading.
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    Keywords

    property returns; portfolio structure;

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