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Does corporate real estate create wealth for shareholders?

Kim Hiang Liow (Department of Real Estate, National University of Singapore, Singapore)
Joseph T.L. Ooi (Department of Real Estate, National University of Singapore, Singapore)

Journal of Property Investment & Finance

ISSN: 1463-578X

Publication date: 1 October 2004

Abstract

This study examines the influence of corporate real estate (CRE) on shareholder value using two value‐based measures: economic value added (EVA) and market value added (MVA). We find that CRE has impacted negatively on non‐real estate firms' EVA and MVA in the period 1997‐2001. This happens for the non‐real estate corporations from different industries. Further, the higher the real estate asset intensity, the greater the negative impact on the firms' EVA and MVA. Our results have important implications for the traditional notion that there is a competitive advantage in owning CRE by diversified conglomerates. Specifically, more studies are needed to explore and compare the main reasons and motivations as to why Asian non‐real estate firms are still more involved with real estate activities than their counterparts in Europe and USA even though ownership of CRE appears to destroy shareholders' wealth.

Keywords

Citation

Hiang Liow, K. and Ooi, J.T.L. (2004), "Does corporate real estate create wealth for shareholders?", Journal of Property Investment & Finance, Vol. 22 No. 5, pp. 386-400. https://doi.org/10.1108/14635780410556870

Publisher

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Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited