The average allocation to real estate by the top 50 public and private pension funds will increase to 7% of total assets, from 6%, according to a survey by Greystone Realty Corp., a real estate asset manager.
Almost half of the respondents said they already fund development or that their fund would begin to look at development during the current real estate cycle, according to the survey. Almost $2 billion in new money will be allocated to real estate, according to the survey. Taking appreciation into account and applying the findings to the top 200 pension funds, investment in real estate is likely to be more than $5 billion.
``The influx of new capital is likely to further increase prices and thus decrease yields for purchasers of stabilized institutional grade real estate,'' said Richard Meloy, senior vice president of Greystone.