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| Real Estate Diversification Benefits Author: Dirk P.M. DeWit Start Page: 117 Abstract: Diversification
benefits are shown to vary inversely with the correlation between asset returns. The
present study estimates average correlation coefficients between real-estate returns from
property-specific data of an internationally diversified real estate and in the
Netherlands. It is found that diversification benefits within the United States are much
larger than on the European Continent. The low correlation found between U.S. real estate
returns implies that portfolios of small numbers of U.S. properties would require large
return premia. Also, the study helps to explain shy financial intermediaries exist in the
real estate industry and when investors should consider employing them. |
