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Sector, Region or Function? A MAD Reassessment of Real Estate Diversification in Great Britain

Author

Listed:
  • Peter Byrne

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

  • Stephen Lee

    (Cass Business School, City University London)

Abstract

This paper re-examines whether it is more advantageous in terms of risk reduction to diversify by sector or region by comparing the performance of the 'conventional' regional classification of the UK with one based on modern socio-economic criteria using a much larger real estate data set than any previous study and the MAD portfolio approach. The general conclusion of this analysis is that property market sectors still dominate regions, however defined and so should be the first level of analysis when developing a portfolio diversification strategy. This is in line with previous research. When the performance of Functional groups is compared with the 'conventional' administrative regions the results here show that, when functionally based, groupings can in some cases provide greater risk reduction. In addition the underlying characteristics of these functional groups may be much more insightful and acceptable to real estate portfolio managers in considering the assets that a portfolio might contain.

Suggested Citation

  • Peter Byrne & Stephen Lee, "undated". "Sector, Region or Function? A MAD Reassessment of Real Estate Diversification in Great Britain," Real Estate & Planning Working Papers rep-wp2010-05, Henley Business School, University of Reading.
    • Handle: RePEc:rdg:repxwp:rep-wp2010-05
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    File URL: http://www.reading.ac.uk/rep/fulltxt/0510.pdf
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    Cited by:

    1. Marisa Gigante, 2012. "The incidence of real estate portfolio composition choices on funds performance: Evicence from the Italian market," ERES eres2012_186, European Real Estate Society (ERES).

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