Liquidity is a critical issue for institutional investors today, according to a study on alternative investments from Russell Investments . As a result, global real estate investment trusts are seeing more interest both for liquidity and diversification. "We've seen a significant rally on the securities side of the real estate market in the last 12 months. Investors are putting a higher degree of confidence on liquidity," said Victor Leverett , managing director.
The study found that allocations to alternatives, including real estate, could increase by a third over the next few years. While there had been a sense that investors would be rethinking their commitments, this was not the case. "It proved that people who were originally invested were recommitting. People that weren't invested see it as an opportunity to build out their alternatives program," Leverett added.
In North America, institutional investors are allocating an average of about 4% of their portfolio to real estate, lagging behind Europe at 4.9%. This can be attributed to more diverse portfolios across the board, Leverett said, adding that more investors in the region are looking towards real estate for the first time.
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