To read this content please select one of the options below:

US real estate as target assets for European investors: New empirical evidence of diversification benefits

Cay Oertel (International Real Estate Business School, University of Regensburg, Regensburg, Germany)
Thomas Gütle (US Treuhand, Munich, Germany)
Benjamin Klisa (Deka Immobilien GmbH, Frankfurt, Germany)
Sven Bienert (International Real Estate Business School, University Regensburg, Regensburg, Germany)

Journal of Property Investment & Finance

ISSN: 1463-578X

Article publication date: 10 May 2019

Issue publication date: 10 June 2019




The purpose of this paper is to analyze potential diversification benefits of American real estate assets for European investors. Since European real estate yields are compressed due to several reasons, including high market liquidity and low interest rates, investment managers seek opportunities to provide attractive risk-return profiles for investors. Therefore, empirical proof for improvements to risk-return profiles is highly necessary in the outlined market environment.


The empirical study uses a classic mean-variance optimization approach. In order to isolate potential diversification benefits two investment environments are compared: first, an optimization for the European investment horizon is carried out. Subsequently, the same optimization is performed for European and American assets. For both scenarios, risk-return profiles are obtained and compared.


Two major findings can be stated: first, higher correlations between European and American markets can be observed for the present data in comparison to older studies. Second, the mean-variance optimization of solely European and then mixed European-American portfolios show improvements in risk-return profiles for the latter. Thus, diversification benefits of American properties for European real estate investors can be confirmed.

Practical implications

The empirical study reveals diversification benefits for European investors. Thus, the asset allocation of European investors could be affected by allocating capital toward the USA in order to improve risk-return profiles.


The value of the paper is a precise analysis of two markets, namely Europe as well as the US. Thus, the paper isolates the practical implications for European investors, who are trying to improve risk-returns profile by allocating capital toward the USA.



Oertel, C., Gütle, T., Klisa, B. and Bienert, S. (2019), "US real estate as target assets for European investors: New empirical evidence of diversification benefits", Journal of Property Investment & Finance, Vol. 37 No. 4, pp. 398-404.



Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

Related articles