IPF Commissions Investigation of Current Benchmarking Practices in Commercial Real Estate Investment

Benchmarks in investment management provide the basis on which performance is monitored and judged. The IPF Research Programme (2015-2018) has commissioned Heriot-Watt University, led by Professors Colin Jones and Edward Trevillion, to review contemporary industry practice in benchmarking real estate investment performance.

The research will examine the selection and composition of benchmarks in the context of UK market practice, addressing such issues as the drivers for the choice of different benchmark types and how common it is to specify dual or multiple benchmarks, the motivations for this and problems it creates, as well as how market benchmarks have changed through time and the types of investors being monitored. The research will also consider the implications of changes in benchmark composition for performance measurement and asset selection by institutional investors.

Andrew Angeli, Head of UK Research at CBRE Global Investors, is chairing the Project Steering Group (PSG) that will oversee the research and commented: “Benchmarks touch on much of what fund managers do – how their businesses attract capital and how they are remunerated – but, increasingly, investors appear to be looking to longer-term absolute return or bond-related objectives. This raises questions around the choice, use and role of benchmarks, which this study should provide some valuable insights into.”
Other members of the PSG comprise Simon Wallace, DWS, and Will Robson of MSCI.

The report is due for publication in the early autumn.

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