A Note on Intracity Geographic Diversification of Real Estate Portfolios: Evidence from Hong Kong

Executive Summary. There is mixed evidence on the effectiveness of diversifying real estate portfolios geographically. Some suggest disappointing results are traceable to the use of geographic areas that are too crudely defined. We divide Hong Kong into submarkets, and find that this intracity geographic diversification produces marginally improved portfolio performance in some cases, but that several naïve diversification strategies are effectively efficient.