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An examination of the role of Geneva and Zurich housing in Swiss institutional portfolios

An examination of the role of Geneva and Zurich housing in Swiss institutional portfolios Swiss institutional investors hold approximately 19 per cent of their wealth in property, and the bulk of the allocation to property is housing. The financial reasons which are often given to motivate this investment strategy are twofold. First, property returns are hypothesized to be lowly correlated with the returns on stocks and bonds, and the inclusion of property in portfolios of financial assets should lead to diversification benefits. Second, property is viewed as acting as an effective hedge against inflation. Empirically investigates these two assumptions on the basis of hedonic price indices for Geneva and Zurich apartment buildings. Examines whether an investor who already holds Geneva (Zurich) housing should invest in the other canton. Investigates whether real estate mutual funds should be included in the portfolio in addition to direct real estate holdings. Results suggest that housing is an effective portfolio diversifier but does not provide any better short‐term inflation‐hedging effectiveness than financial assets. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Property Valuation and Investment Emerald Publishing

An examination of the role of Geneva and Zurich housing in Swiss institutional portfolios

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Publisher
Emerald Publishing
Copyright
Copyright © 1997 MCB UP Ltd. All rights reserved.
ISSN
0960-2712
DOI
10.1108/14635789710693182
Publisher site
See Article on Publisher Site

Abstract

Swiss institutional investors hold approximately 19 per cent of their wealth in property, and the bulk of the allocation to property is housing. The financial reasons which are often given to motivate this investment strategy are twofold. First, property returns are hypothesized to be lowly correlated with the returns on stocks and bonds, and the inclusion of property in portfolios of financial assets should lead to diversification benefits. Second, property is viewed as acting as an effective hedge against inflation. Empirically investigates these two assumptions on the basis of hedonic price indices for Geneva and Zurich apartment buildings. Examines whether an investor who already holds Geneva (Zurich) housing should invest in the other canton. Investigates whether real estate mutual funds should be included in the portfolio in addition to direct real estate holdings. Results suggest that housing is an effective portfolio diversifier but does not provide any better short‐term inflation‐hedging effectiveness than financial assets.

Journal

Journal of Property Valuation and InvestmentEmerald Publishing

Published: Oct 1, 1997

Keywords: Housing; Investment property; Switzerland

References