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The few studies that have looked at regional diversification of real estate portfolios have segmented the United States into four regions without regard to the underlying economic activity in those four regions. In this study, results are presented which analyze the regional diversification issue by segmenting the country into eight regions based on similar underlying economic fundamentals. The results differ from previous studies in showing that eight-region diversification provides benefits that cannot be achieved from four-region diversification, hence indicating that location does play an important role in real estate portfolio management.
Hartzell et al. (Thu,) studied this question.