Real estate market factors and foreign real estate investment

Abstract

Purpose

The purpose of this paper is to examine the effects of real estate market factors on foreign real estate investment (FREI).

Design/methodology/approach

Applying panel data technique, this paper uses related observations from 31 countries (inclusive of developed countries and emerging market economies) between 2000 and 2008 to investigate the relationships between real estate market factors and FREI.

Findings

Controlling for market size, infrastructure and political stability, the results for all countries indicate that lower financing costs and higher levels of transparency in real estate market attract greater amounts of FREI. Moreover, the paper finds that foreign real estate investors favor countries with higher property prices. Interestingly, when the paper splits the sample in developed countries and emerging market economies the paper finds that there are some differences in results in terms of determinants of FREI.

Originality/value

While FREI is a large component of service FDI, currently there are no analyses of FREI determinants across a broad set of countries over time. Therefore, the present study has filled this gap.

Citation

Gholipour Fereidouni, H. and Ariffin Masron, T. (2013), "Real estate market factors and foreign real estate investment", Journal of Economic Studies, Vol. 40 No. 4, pp. 448-468. https://doi.org/10.1108/JES-05-2011-0066