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Evolution of the Housing Market in Moscow

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196.PDF © Dr. Victoria Walbröhl - 1 - Real Estate Asset Management of German Institutional Investors – Theory and Reality Dr. Victoria Walbröhl MEAG Real Estate Management GmbH Oskar-von-Miller-Ring 18 80333 Munich Germany Tel.: ++ 49 – 89 – 24 89 25 35 Fax: ++ 49 – 89 – 24 89 11 25 35 Email: [email protected] Keywords: Institutional Investor, Asset Management, Real Estate Abstract: The integration of real estate as an asset class into the context of the asset allocation decision-making process is of growing concern to institutional investors in Germany. Investors holding mixed-asset portfolios in particular are considering new approaches to determine what share of their assets should be allocated to real estate, and how their real estate portfolios should be structured. The first part of this paper presents a theoretical model of real estate asset management describing the ideal decision-making process. The model takes into account the findings of Modern Portfolio Theory and the empirical evidence of previous studies on the diversification benefits of including real estate. Using a Markowitz optimization model, it can be shown that the inclusion of directly-held German real estate investments and German real © Dr. Victoria Walbröhl - 2 - estate shares in mixed-asset portfolios will yield positive diversification effects. The second part of the paper investigates the actual real estate decision- making process based on the results of a survey conducted among German life insurance companies and pension funds. The survey revealed a significant gap between theory and the reality of real estate asset management as pursued by German institutional investors. © Dr. Victoria Walbröhl - 3 - 1 Introduction Among the large institutional investors with real estate assets in Germany we find insurance companies, open-ended and closed-ended real estate funds as well as real estate s

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