Residential Property as an Institutional Asset: The Swiss and Dutch Cases

Joaquim Montezuma and Kenneth Gibb

Journal of Property Research, 2006, vol. 23, issue 4, 323-345

Abstract: This study evaluates residential property as an institutional asset group in two European countries (Switzerland and the Netherlands). These are countries where housing is the main institutional property asset group, with institutional property portfolio allocations of over 52% and 50% respectively. Two criteria were used to evaluate residential property as an institutional asset group. First, the size of the private rented stock potentially available for institutional investors must be sufficiently large in order to provide significant diversification benefits. Second, in terms of risk and return, housing must offer good mean‐variance performance. Direct residential property is compared with other asset groups: shares (domestic and European indices), government bonds and indirect non‐residential property. A bootstrap analysis (Efron, 1979; Liang et al. , 1996; Ziobrowski el al. , 1997) is employed to estimate confidence intervals for the optimum level of residential property in mixed‐asset portfolios. The paper concludes, on balance, that there is a case for a residential property component within portfolios in these two countries.

Date: 2006
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DOI: 10.1080/09599910601095324

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