The Legg Mason Global Investment Survey 2014 looked at the attitudes of 4,200 affluent investors around the world and discovered that, on average, Australian investors allocate 27 per cent of their portfolios to real estate, an allocation that is 10 percentage points higher than their global counterparts.
The survey also found 42 per cent of Australian investors rely on property for income, despite the asset class yielding lower than the ASX 200 index or 10-year bonds, and only marginally higher than a one-year deposit.
The survey results indicate there was a significant gap between the returns Australians expect to receive and what they actually receive.
While Australian investors expected an average 9.2 per cent annual return, the survey discovered they were only receiving 6.2 per cent on average.
Legg Mason’s global head of distribution marketing, Matt Schiffman, said the high allocation towards property in Australia could be contributing to this “reality gap”, as the difference between expected returns and actual returns was most pronounced in property investment.
“Australians have a well-documented love affair with property, but current low average yields in this sector are affecting income opportunities for investors,” he said.
"We found returns were closer in line with expectations for asset classes like equity income and guaranteed income products, which were less popular with Australian investors.”
Australians look likely to maintain their preference for property investment, with 29 per cent of respondents planning to increase their exposure to property within the next 12 months.