For the first time since Hodes Weill & Associates and Cornell University’s Baker Program in Real Estate began publishing their annual Real Estate Allocations Monitor, institutional investors have slightly pared back their target allocations to property. The 2025 survey shows an average target allocation of 10.7%, down 10 basis points from the 10.8% level held steady from 2022 through 2024.
According to the report, two main factors explain the modest decrease. The first is continued market uncertainty, which has weighed on institutional strategies for several years. Ongoing questions around asset valuations, fluctuating interest rates, 10-year Treasury yields, transaction volumes, and broader economic variables such as labor costs have tempered enthusiasm for real estate. The second driver is rising competition from other asset classes, particularly private credit and infrastructure.
That competition is evident in related data from the Institutional Infrastructure Allocations Monitor, also published by Hodes Weill and Cornell. The 2025 results show average target allocations to infrastructure rose to 5.9%, climbing 40 basis points from 2024 and 80 basis points from 2023. The trend is strongest outside the Americas, where allocations declined 0.4%. So far, 23% of surveyed institutions plan to raise infrastructure allocations again within the next year, encouraged by 2024 returns averaging 9.6%.
Investor positioning toward real estate still varies substantially by region. In the Americas, 58% of institutions include property within their real assets allocation, compared with 81% in Europe, the Middle East, and Africa (EMEA) and 92% in the Asia-Pacific (APAC) region. Overall, 68% of respondents globally maintain real estate exposure in their portfolios.
Among notable institutional adjustments, the New York State Common Retirement Fund increased its real estate allocation from 9% to 12%, while the State Teachers’ Retirement System of Ohio raised its target from 8% to 10%. Others moved in the opposite direction: Maryland’s State Retirement & Pension System reduced its allocation from 10% to 9%, and both the Teachers’ Retirement System of Oklahoma and the North Dakota Investment Board cut back from 10% to 8%. Asset levels among these funds range from $8.2 billion to nearly $284 billion, according to Hodes Weill and Cornell.
Despite the recent dip, the outlook for real estate remains steadier than the short-term numbers suggest. The survey projects that average target allocations will increase 10 basis points by 2026—returning to 10.8%. The report concludes that “real estate remains a key ballast” in institutional portfolios, and many investors continue to expect stronger performance as market conditions normalize.
This year’s survey drew participation from 166 institutions, roughly 7% of those contacted, representing 26 countries and a combined $14.7 trillion in total assets. Public pensions were the largest respondent group at 33%, followed by endowments and foundations at 25%, private pensions at 21%, insurance companies at 16%, and sovereign wealth and government entities at 5%. Sixty-one percent of respondents were based in the Americas, with 25% in EMEA and 14% in APAC. In total, the institutions managed $1.4 trillion in real estate assets, and 49 reported more than $50 billion in assets under management.
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