Pension Fund Activity Bodes Well for Recovery

A consensus forecast from top institutional-level real estate investment firms shows the NCREIF Property Index returning to historical averages over the next three years following a strong performance in 2010. The Pension Real Estate Association conducted the 1Q11 consensus survey among 18 top institutional investment firms.

Average 2011 forecasts for office, apartments, retail, and industrial have risen since last quarter. The report attributes the bullish forecast to strong property markets and signs that the economic recovery has taken hold.

More than half (55 percent) of survey respondents predict that apartments will have the highest returns in 2011, followed by office (36 percent), and retail (9 percent). No respondents expect industrial to lead the property sectors in returns this year.

Looking further ahead, the majority of firms (54 percent) forecasted office to have the highest returns from 2011-2015. Apartment, industrial, and retail sectors were split at 15.4 percent each during the same period.