Geographic Diversification, Proximity Bias, and Performance of Swiss Real Estate Funds

Tomasz Orpiszewski, Mark Thompson and Laura Archer-Svoboda

ERES from European Real Estate Society (ERES)

Abstract: This study explores the relationship between diversification strategies of Swiss real estate fund portfolios and their financial performance. Leveraging a novel dataset developed in collaboration with Conser ESG Verifier, the research analyzes 41 funds encompassing over 9,000 properties. Key spatial metrics—such as distance to headquarters, geographic diversification, and linguistic proximity—were defined at the property level and aggregated to the fund level. Using cross-sectional regressions alongside categorical and spatial similarity analyses, the study reveals that Swiss real estate funds generally exhibit geographically concentrated portfolios, often situated near their headquarters and in linguistically aligned regions. While larger asset bases promote greater diversification, geographic spread and local investment focus do not significantly impact financial returns. Instead, returns are positively associated with fund age and portfolio size. Furthermore, similarity analysis highlights distinct differences among funds in terms of property types and spatial investment patterns. This research not only provides a unique dataset on Swiss real estate portfolios but also uncovers critical links between property characteristics, geographic and linguistic factors, and fund performance, enhancing transparency and comparability within the sector.

Keywords: Diversification; Proximity Bias; Real Estate Funds; Swiss Real Estate (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2025-01-01
New Economics Papers: this item is included in nep-sbm
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