Determinants of foreign direct real estate investment in selected MENA countries
Abstract
Purpose
The purpose of this paper is to identify the main determinants of foreign direct real estate investments (foreign direct investment (FDI)) in selected Middle Eastern and North African (MENA) countries.
Design/methodology/approach
The empirical work of this study is an econometric analysis of FDI in the commercial real estate sector for eight MENA markets, namely Algeria, Egypt, Morocco, Qatar, Saudi Arabia, Turkey, Tunisia and the UAE during the period 2003-2009. The econometric analysis is carried out using the pooled Tobit model technique for panel data.
Findings
The paper finds that both country-specific factors and real estate sector-specific variables consistently support hypotheses explaining commercial real estate-related FDI, and find evidence that political stability explains why some selected MENA countries attract more real estate investments than other MENA countries.
Practical implications
The findings should be seriously considered in any policy making effort on the part of governments in the region.
Originality/value
The authors contribute to the existing literature in many ways. First, the study aims to develop econometric models, using both conventional and unique variables, to be generalised and applied to any developed or emerging market. The study applies relevant techniques in estimating the models, including the pooled Tobit model. Second, the research studies eight selected MENA real estate markets from 2003 to 2009, a timeframe and geography not examined in previous published empirical work on commercial real estate investments. Lastly, and for the first time in real estate literature, the study applies the location dimension of Dunning’s OLI paradigm as a theoretical explanation for the behaviour of foreign investors in commercial real estate towards the selected MENA markets.
Keywords
Citation
Salem, M. and Baum, A. (2016), "Determinants of foreign direct real estate investment in selected MENA countries", Journal of Property Investment & Finance, Vol. 34 No. 2, pp. 116-142. https://doi.org/10.1108/JPIF-06-2015-0042
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited