The discrepancy between suggested and actual allocations to real estate by institutional investors constitutes a puzzle. The allocation to real estate, however, has increased in recent years and as a result the flows to the market are now of great magnitude. In this paper, we argue that an increased allocation is made possible mainly by the development of new investment vehicles, in particular of private real estate funds, but also of the growing integration of economic regions and of other factors such as the development of investment benchmarks. The increased inflow of capital is suggested to be a function of two factors; an increased focus on absolute return target investments amongst institutional investors and an increased target allocation to real estate. The flows to the market for the actual allocation to match the suggested allocation are found to constitute at least 31% of the real estate equity universe held by owner occupiers. We estimate that seven years would be needed to reach the target allocation, but it is unlikely that sufficient investment opportunities will arise unless the willingness of owner occupiers to sell off real estate assets from their balance sheets increases.