Words to use, and some to lose
By Adam FreillLeadership
Research-based language study measures emotional response investors have to common real estate investing words and phrases.
Language matters, and new research is indicating that the selection of phrasing can have a positive or negative impact on the world of real estate investing. A recently released year-long study from Invesco and Maslansky + Partners titled, Building Opportunities: The Compelling Language of Real Estate Investment Trusts, indicated that many commonplace words and phrases could be helped with a bit of editing.
“Although most of the investors surveyed had favourable views on real estate investing, their views shifted depending on how certain concepts were presented,” said Paul Brunswick, head of Invesco Global Consulting.
Invesco Global Consulting researched how to best articulate core benefits of Real Estate Investment Trusts (REIT) in a study with 500 accredited investors. The research indicates that word choice can impact the importance of potential benefits to clients.
Among the phrases to receive a more positive response, and were tagged as words to use, were: “Consistent rental income,” “A portfolio invested in different markets,” “A source of income that can rise to stay ahead of inflation,” and “REITs that are more stable than equities.”
The corresponding words to lose, based on the research, are: “Durable rental income,” “A portfolio invested in different properties,” “An inflation hedge,” and “REITs that are less volatile than equities.”
When in doubt, the research suggests the use of plainspoken language.
When asked what they would rather add to their portfolio for inflation protection, 24 per cent of respondents selected “an inflation hedge,” while 76 per cent preferred the phrasing “a source of income that can rise to stay ahead of inflation.” The phrase “hedge” is not a plainspoken potential benefit and often investors think of the term in a negative light, explained Invesco.
The study also found that not all real estate is perceived equally by investors. The majority of investors felt it was a good time to invest in technology projects, apartments/suburban housing and storage but were less comfortable investing in retail, commercial and office space. According to the researchers, most accredited investors immediately thought of empty office buildings as a risk, rather than an opportunity.
It was interesting to note the preference for positivity in language, such as the use of “more” rather than “less.” Two-thirds of accredited investors preferred the phrase “increasing efficiencies” over “reducing inefficiencies” despite a remarkably similar net meaning.