Moving towards a global real estate index

Abstract

Purpose

This paper aims to explore the steps that need to be taken in developing a measure of global performance for direct real estate.

Design/methodology/approach

The paper starts by reviewing the major considerations concerning the available real estate performance series across the world. The paper explains the steps that work through the obstacles of deriving an aggregate performance measure for each of the three regions and then combining them to get a global property returns series. Back‐casting series and weighting assumptions are also covered.

Findings

Based on the preliminary results, the paper explores the correlations in the results between different countries, and the performance of “global” property relative to other major asset classes. The paper concludes by drawing out the research issues and implications, and the steps for further research.

Practical implications

Many challenges are involved in the construction of a global index of direct real estate market performance. On the one hand these are associated with the nature of real estate, which tends to be relatively illiquid and immature as an asset class. On the other, there are significant variations in the quality of data availability across countries. IPD has played a huge role in generating consistent data series across countries, and this increases the ability to move towards a “global index” of direct market performance.

Originality/value

The study examines the increasing need for a global performance benchmark for direct real estate and the way a practitioner approaches the limitations and challenges involved in constructing one.

Citation

Topintzi, E., Chin, H. and Hobbs, P. (2008), "Moving towards a global real estate index", Journal of Property Investment & Finance, Vol. 26 No. 4, pp. 286-303. https://doi.org/10.1108/14635780810886654