Evaluating the effectiveness of common structures in property portfolio construction
Devaney, S., (2003) Evaluating the effectiveness of common structures in property portfolio construction. Working Papers in Real Estate & Planning. 13/03. Working Paper. University of Reading, Reading. pp11.
A good portfolio structure enables an investor to diversify more effectively and understand systematic influences on their performance. However, in the property market, the choice of structure is affected by data constraints and convenience. Using individual return data, this study tests the hypothesis that some common structures in the UK do not explain a significant amount about property returns. It is found that, in the periods studied, not all the structures were effective and, for the annual returns, no structures were significant in all periods. The results suggest that the drivers represented by the structures take some time to be reflected in individual property returns. They also confirm the results of other studies in finding property type a much stronger factor in explaining returns than regions.