MIND-SETS TOWARDS REAL ESTATE RISK: AN INITIAL COMPARISON BETWEEN BRAZILIAN AND GERMAN INSTITUTIONAL INVESTORS

This paper is part of a wider research project, conducted at the Real Estate Research Group, whose main objective is to provide theoretical basis and a methodology for institutional investors to properly consider real estate assets in their investment portfolios. Another research objective is to get some evidence regarding the impact that the recent crisis on global financial markets and, more specifically, the reflexes on real estate markets, might have had on institutional investors and their investment decision-support systems. As an initial step in this process, the present research took place, with the purpose of identify which were the factors that Brazilian institutional investors recognize as part of their decision making processes, and try to propose future adjustments in order to prevent or mitigate risks. For that, a questionnaire was designed to recognize structural issues on the process of real estate investment decision-making. In order to make the results comparable to those of other studies, it was used as major reference in this stage of the research, the work of Pfnuer and Armonat (2001). In this work, the authors successfully accomplished a wide survey with German institutional investors, and the results were systematized and made fully available, thus giving excellent conditions for the execution of comparative analyses. Therefore, after a study of the documentation from the original research accomplished in Germany, the questionnaire to be applied in Brazil was designed, focusing on the classification of factors that can affect the performance of real estate investments. In general terms, these factors are classified by the structural characteristics of a specific project, and by the evolution of the general conditions of the environment which affects investment projects. The questionnaire will be send through major institutional investors' associations, and a good response was already obtained in the pilot test. Up to the present moment, the preliminary results indicate a good acceptance of the questionnaire, being necessary minor adaptations to the Brazilian market. That makes possible future comparative analysis with German research to be accomplished. It is expected that this research will benefit both the corporate and academic community, with respect to the identification of influence factors that can subsidize the development of investment policies and decision support processes that better incorporate the specificities of the real estate assets.