One of the world's leading asset managers has launched a new tool to assist institutional investors manage risk when investing in global real estate.
Standard Life Investments' Global Real Estate Implementation Risk tool (GREIR) matches investors’ risk appetite with appropriate markets.
Anne Breen, head of real estate research and strategy at Standard Life Investments said the level of risk in real estate investment varies enormously from country to country, and the historic measures used for these can mean investors miss changes in risk.
“The aim of the GREIR tool is to address the need for a robust framework on which to base decisions about global and regional real estate investment strategies," she said.
“It provides a more coherent measurement of the domestic risks involved, and helps investors find the right markets for their level of risk appetite."
The GREIR tool aggregates data points to evaluate and assess economic, political and real estate specific risks. Indices from the three categories are weighted to produce a risk score of between 1 and 10 for each of the 60 countries included on the rankings. The country with the lowest score is the least risky for investment.
The seven components of the score are market size, ease of doing business, competitiveness, innovation, public sector corruption, credit default swap spreads and transparency.
Standard Life Investments expects the tool to expand over time to include leading cities within the countries listed.