Over the past couple of decades a behavioural real estate research paradigm has been developing. In this paper, observed aggregate behaviour within the institutional real estate investment community is analysed and related to economic assumptions underpinning investment theory and market functionality. Evidence is found to challenge economic rationality in investor decision-making. Cyclicality is identified in the interactions between the investment and development markets, which results in the lack of high quality property investment across geographically diverse regions lamented by economic development authorities. Some consequences for ëregionalí economic development are explored.