A Survey of Institutional Investors' Attitudes and Perceptions of Residential Property: The Swiss, Dutch and Swedish Cases

Abstract

This paper provides evidence about institutional investors' attitudes and perceptions of residential property as an investment asset group in three European countries (Switzerland, the Netherlands and Sweden). These countries stand out, with an extraordinarily large institutional residential ownership, in fact, residential institutional allocation represents about 6 per cent, 2 per cent and 3 per cent of the total institutional investment in Switzerland, the Netherlands and Sweden, respectively. Housing is the most important institutional property asset type in Switzerland and the Netherlands, comprising over 52 per cent and 50 per cent of their institutional property portfolios, respectively. In Sweden residential property plays an important, but not dominant role in the domestic institutional property portfolios, representing about 21 per cent of the institutional property holdings. Using a postal survey of representatives of pension funds, insurance companies, property investment and asset management companies the study analyses the attractiveness of residential property in terms of institutional investment goals. The survey examines the institutional investors' perceptions of housing investment, namely with respect to its returns, volatility, inflation hedging, liabilities matching and correlation with shares, bonds and non-residential property. Additionally, the survey looks at the institutional investors' experiences regarding the private rented sector. The survey suggests that investment in residential property equity is likely to be done through larger portfolios, which tend to invest in housing directly. Residential property is seen mainly as an earning asset group able to provide diversification benefits for investors even when portfolios already include non-residential property. The respondents are mainly concerned with rent regulation issues, the lack of well-structured investment vehicles is undoubtedly a less important problem.