The United States is an outperformer in today’s global real estate market, but a combination of heightened market risks and portfolio-level factors point to benefits for U.S.-based investors from adopting a more diversified approach.

Focusing on equity, we identify three key benefits arising from the addition of an international allocation to domestic real estate exposure: 

• Diversification: International allocations offer a potential route to reduced concentration risk and an opportunity to efficiently target superior risk-return outcomes.
• Targeted strategies: Investors can look beyond the United States to build exposure to attractive global themes that have less prominence in the domestic market, such as office and hospitality.
• Capture risk premium: Deploying capital in sectors that are not yet fully institutional in international markets, seeking to earn outsized returns, such as self storage and senior living.