Behaviours of property investors: an investigation on the risk perceptions of Australian property fund managers

Recent finance and real estate empirical and analytical studies have demonstrated that downside risk appears as an intuitively appealing risk measure in which it is more consistent with investors' behaviours. Conversely, qualitative studies into the behaviours of investors, particularly real estate investors, have been relatively limited. This study seeks to address this shortfall and aims to examine the behaviours of property fund managers towards downside risk. A survey was conducted in order to investigate the risk perceptions of property fund managers and determine whether they only require compensation for bearing with higher downside risk. The acceptance level of downside risk in the property funds industry in Australia is also examined. The findings reveal that downside risk is more consistent with how investors individually perceive risk. However, there is also a gap between theoretical assertions and practice in which downside risk is not commonly used in the practice. The results give an insight into the knowledge base of property investors towards downside risk.