There are a few factors to consider when deciding whether to allocate pension funds to property investments:

– Diversification – Property can offer diversification benefits to a pension portfolio focused on stocks and bonds. However, real estate shouldn’t make up more than 20% of a pension fund’s overall assets for adequate diversification.

– Risk profile – Property investments tend to be less liquid and have higher transaction costs than stocks and bonds. The risk/return profile should align with the pension fund’s goals and time horizon.

– Management expertise – Managing property assets requires real estate expertise. Pension fund managers should ensure they have the skills and resources to actively manage a property portfolio. Passive property funds are an option if lacking real estate expertise.

– Expenses – Property investments have higher expenses like maintenance, insurance, property taxes, etc. This could eat into returns if not managed properly.

– Liquidity needs – Pensions require regular liquidity to pay retirees. illiquid property assets may not align with near-term pension liabilities.

– Tax implications – Pensions receive tax exemptions on investments. Direct property ownership could result in taxes that erode returns for the pension fund.

Overall, modest allocations to commercial real estate funds, REITs, and other property assets can provide diversification and inflation hedging benefits to pensions. But pensions should ensure they have the expertise, resources, and risk tolerance to prudently incorporate property into their investment strategy. Consulting a financial advisor can help determine appropriate property allocation.