Crowdfunding REITs: a new asset class for the real estate industry?
Journal of Property Investment & Finance
ISSN: 1463-578X
Article publication date: 30 March 2020
Issue publication date: 10 February 2021
Abstract
Purpose
The paper aims to study the performance of crowdfunding REITs with respect to traditional REITs in order to evaluate the differences in the risk–return profile and their usefulness for a diversification strategy within the indirect real estate investments.
Design/methodology/approach
The paper considers the crowdfunding REITs introduced after the JOBS act in the United States and evaluates their performance and risk during the time period 2016–2018. Performance achieved by crowdfunding REITs is compared with other types of REITs in order to evaluate their usefulness for constructing an optimal portfolio strategy based on a standard mean variance approach.
Findings
Results show that the performance of crowdfunding REITs is more stable over time with respect to other REITs and the lack of correlation with traditional REITs may be exploited for constructing a more efficient diversified portfolio of indirect real estate investments.
Practical implications
Crowdfunding REITs have different performance with respect to standard REITs and, especially individual investors, may benefit from including this new investment opportunity in their portfolio.
Originality/value
The paper is the first study on the performance of the crowdfunding REITs that is evaluating their usefulness for a diversification strategy within the real estate sector.
Keywords
Acknowledgements
This paper forms part of a special section “PropTech and Entrepreneurship - Innovation in Real Estate II”, guest edited by Dr Larry Wofford, Dr David Wyman, Dr Elaine Worzala. Authors are grateful to the editor, the two anonymous referees and all participants to the EPRA panel organized during the European Real Estate Society 2019 annual meeting for all the useful suggestions for revising and improving the previous drafts of the paper. The article is the results of authors’ combined efforts and continuous exchange of idea. The introduction and literature review has to be ascribed to Lucia Gibilaro and all other sections to Gianluca Mattarocci.
Citation
Gibilaro, L. and Mattarocci, G. (2021), "Crowdfunding REITs: a new asset class for the real estate industry?", Journal of Property Investment & Finance, Vol. 39 No. 2, pp. 84-96. https://doi.org/10.1108/JPIF-08-2019-0112
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited