The City of London Office Bias

Stephen Lee

ERES from European Real Estate Society (ERES)

Abstract: It is well known that institutional investors are noticeably overweight in the City of London office market and substantially underweight in offices in the rest of the UK. An economically sensible way to measure this bias is to calculate the additional required return on offices outside the City of London necessary to tilt the intuition's allocation away from that observed. In other words, in a world without any bias, this number would reveal how much return offices outside of the City of London would have to exceed those in the City to motivate investors to diversify their holdings into other markets. Using quarterly data from 2001-2011 the results indicate that this bias is large and cannot be easy explained by lot size, illiquidity, and familiarity.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2013-01-01
New Economics Papers: this item is included in nep-ure
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