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| Uncertainty and Foreign Real Estate
Investment Author: Ping Cheng, Alan J. Ziobrowski, Royce W. Caines, and Brigette J. Ziobrowski Start Page: 463 Abstract: Published research has
offered little evidence in support of foreign real estate investment. Most of the
literature suggests that foreign real estate yields investors in mixed-asset portfolios no
tangible benefits in terms of diversification gains. However all these studies were done
on the basis of point estimates where they solve for a single unique optimum portfolio
composition. Thus, earlier research has left the impression that foreign real estate is
‘‘never’’ optimal. Here we use a bootstrap simulation to introduce
uncertainty into the analysis. Our results suggest that although foreign real estate is
not likely to provide investors with significant diversification benefits, substantial
amounts of foreign real estate can potentially be optimal. |
