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Article
Publication date: 17 July 2020

Ashish Gupta, Graeme Newell, Deepak Bajaj and Satya Mandal

Real estate forms an important part of any economy and the investment in real estate, in turn, is impacted by the macroeconomic environment of that country. The purpose of…

Abstract

Purpose

Real estate forms an important part of any economy and the investment in real estate, in turn, is impacted by the macroeconomic environment of that country. The purpose of the present research is to examine macroeconomic determinants of foreign and domestic non-listed real estate fund (NREF) flows and to examine whether they are similar or different for an emerging economy like India.

Design/methodology/approach

The long and short-run cointegration between the time-series variables is estimated using the autoregressive distributed lag (ARDL) bounds test and error correction model (ECM) using quarterly data across the 2005–2017 period. ARDL is a suitable method for short time-series data.

Findings

The empirical results indicate that domestic NREF flows are positively and significantly impacted by real GDP and performance of listed real estate stocks (i.e. BSE realty index). Whereas, foreign NREF flows are positively and significantly impacted by the exchange rate, performance of listed real estate stocks and domestic NREF flows.

Practical implications

The empirical results have significant implications for academicians, policy makers and real estate market practitioners. In the context of these results, some interesting insights are gained that would help in the implementation of the policies aimed toward increasing the fund flows in the real estate sector, which in turn would have a significant trickle-down effect on the Indian economy.

Originality/value

The existing literature looks at macroeconomic and other drivers of foreign investment in international real estate investments. However, there are very few studies on the determinants of domestic real estate investment flows and on determinants of NREFs' investment flows; particularly in emerging markets. The present study, in contrast, evaluates simultaneously the macroeconomic determinants of the domestic and foreign NREFs' investment flows in India. The ARDL and ECM method used has been applied for the first time to the study of NREFs.

Details

Journal of Property Investment & Finance, vol. 38 no. 6
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 1 January 1989

Steven P. Mooney and Kate Mooney

Provides a review and synthesis of the finance literature regardingforeign investment and the real estate literature dealing with foreigninvestment in US real estate

Abstract

Provides a review and synthesis of the finance literature regarding foreign investment and the real estate literature dealing with foreign investment in US real estate. Addresses the motivations for investing in US real estate, including the potential for increased returns as well as the potential for risk reduction. Proposes an investment decision making model indicating factors that foreign investors need to consider when investing in US real estate.

Details

Journal of Valuation, vol. 7 no. 1
Type: Research Article
ISSN: 0263-7480

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Article
Publication date: 7 March 2016

Mohamed Salem and Andrew Baum

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…

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.

Details

Journal of Property Investment & Finance, vol. 34 no. 2
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 30 August 2013

Hassan Gholipour Fereidouni and Tajul Ariffin Masron

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

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.

Details

Journal of Economic Studies, vol. 40 no. 4
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 1 March 1995

Brigitte Ziobrowski and Alan Ziobrowski

Recent studies on foreign investment in US real estate provideevidence that fluctuating exchange rates are likely to reduce thepotential gains from international…

Abstract

Recent studies on foreign investment in US real estate provide evidence that fluctuating exchange rates are likely to reduce the potential gains from international diversification by making these investments more risky. However, other research has suggested that forward currency contracts may provide an effective mechanism for offsetting exchange rate volatility and thus restore the diversification benefits. Examines the use of forward contracts as a means of hedging the currency risk associated with foreign investment in US real estate. Indicates that, although continuous hedging of US real estate with forward contracts allows foreign investors to eliminate most of the risk induced by currency instability, the improvements are insufficient to produce diversification gains for all foreign investors in the context of meanvariance portfolio performance.

Details

Journal of Property Valuation and Investment, vol. 13 no. 1
Type: Research Article
ISSN: 0960-2712

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Article
Publication date: 15 March 2019

Hassan F. Gholipour, Hooi Hooi Lean, Reza Tajaddini and Anh Khoi Pham

The purpose of this study is to examine the impact that foreign investment in existing houses and new housing development has on residential house prices and the growth of…

Abstract

Purpose

The purpose of this study is to examine the impact that foreign investment in existing houses and new housing development has on residential house prices and the growth of the housing construction sector.

Design/methodology/approach

The analysis is based on a panel cointegration method, estimated using annual data for all Australian states and territories spanning the period of 1990-2013.

Findings

The results indicate that increases in foreign investment in existing houses do not significantly lead to increases in house prices. On the other hand, a 10 per cent increase in foreign investment for housing development decreases house prices by 1.95 per cent. We also find that foreign real estate investments have a positive impact on housing construction activities in the long run.

Originality/value

Existing studies used aggregate foreign real estate investment in their analyses. As foreign investment in existing houses and foreign investment for housing development have different impacts on the demand and supply sides of housing market, it is crucial that the analysis of the effects of foreign investment in residential properties on real estate market is conducted for each type differently.

Details

International Journal of Housing Markets and Analysis, vol. 12 no. 2
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 8 January 2020

Su Zhenyu and Paloma Taltavull

The purpose of this paper is to examine the determinants that affect international capital flows (ICF) toward the Spanish real estate market over the period 1995 first…

Abstract

Purpose

The purpose of this paper is to examine the determinants that affect international capital flows (ICF) toward the Spanish real estate market over the period 1995 first quarter to 2017 fourth quarter.

Design/methodology/approach

VECM methodology is used to analyze time series and panel methods using pooled EGLS regression.

Findings

VECM parameter results for construction and real estate activities sectors, quickly suggesting a stable performance of capital flows toward Spanish real estate sector that the short-term fluctuation of foreign investment results contributes to the long-term equilibrium relatively soon. By applying the Monetary theory of Johnson, the model identifies a relevant role of M3 explaining capital flows to real estate, together with the lagged variables of construction and real estate activities capital flows, Spanish real interest rate and Spain’s economic growth rate; they are the significant determinants on capital movement to Spanish real estate sector. Interestingly, Spanish housing prices as an exogenous variable, directly, significantly and negatively affect real estate capital flows in all cases as a way to capture the assets price bubble.

Practical implications

Findings highlight reasons affecting capital flows to real estate and construction activities to Spanish sectors which allow capital Funds to take into account those drivers in their investment decisions.

Originality/value

This paper is the first attempt to analyze the determinants of ICF to Spanish real estate market; it has a significant meaning for both Spanish economy and international investors.

Details

Journal of Property Investment & Finance, vol. 38 no. 2
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 21 July 2020

Olawumi Fadeyi, Stanley McGreal, Michael McCord and Jim Berry

Office markets and particularly international financial centres over the past decade have experienced rapid financialisation, developments and indeed changes in the…

Abstract

Purpose

Office markets and particularly international financial centres over the past decade have experienced rapid financialisation, developments and indeed changes in the post-global financial crisis (GFC) landscape. Importantly, the volume and types of international capital flows have witnessed more foreign actors and vehicles entering into the investment landscape with the concentration of investment intensifying within key financial centres. This paper examines the interaction of international real estate capital flows in the London, New York and Tokyo office markets between 2007 and 2017.

Design/methodology/approach

Using Real Capital Analytics (RCA) data comprising over 5,700 office property transactions equating to $563bn between 2007 and 2017, the direct global capital flows into the London, New York and Tokyo office markets are assessed using an autoregressive distributed lag (ARDL) approach. Further, Granger causality tests are examined to analyse the short-run interaction of international real estate capital flows into these three major office markets.

Findings

By assessing the relativity of internal to external investments in these three central business district (CBD) office markets, differences in market dynamics are highlighted. The London office market is shown to be highly dependent on international flows and the USA, the foremost source of cross-border investment on the global stage. The cointegration and causality analysis indicate that cross-border real estate investment flows in these markets (and financial centres) show both long- and short-run relationships and suggest that the London office market remains more distinct and the most reliant on international capital flows with a wider geographical spread of investment activities and investor types. In the case of New York and Tokyo, these markets appear to be driven by more domestic investment activity and capital seemingly due to subtle factors pertaining to investor home bias, risk aversion and diversification strategies between the markets in the aftermath of the GFC.

Originality/value

Given the importance of the CBD offices in London, New York and Tokyo as an asset class for institutional investors, this paper provides some insights as to their level of connection and the interaction of the international capital flows into these three major cities.

Details

Journal of Property Investment & Finance, vol. 39 no. 4
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 20 June 2019

Taisuke Sadayuki, Kei Harano and Fukuju Yamazaki

The purpose of this paper is to provide new empirical evidence on the important role of market transparency in international real estate investment.

Abstract

Purpose

The purpose of this paper is to provide new empirical evidence on the important role of market transparency in international real estate investment.

Design/methodology/approach

The authors apply the augmented panel regression method (or the correlated random effects approach) by using national panel data from 44 countries from 2004 to 2016.

Findings

Countries with better accessibility to market information and higher enforceability of regulations have less information asymmetry and attract more inward real estate investment. In contrast, the accounting quality of corporate governance is negatively correlated with investment, indicating the possibility that foreign investors enjoy high excess returns by investing in real estate in countries with poor accounting quality.

Practical implications

Countries lacking market transparency can increase inward investments by providing richer market information to foreign investors and by boosting enforceability of regulation to mitigate the uncertainty of returns on investment. Investors and public sectors in countries facing a saturated real estate market may expand investment by investigating less-explored markets and by seeking bilateral negotiations to secure higher predictability of return on investment in targeted countries.

Originality/value

The authors utilize updated multiple transparency indices instead of a conventional aggregate index to examine how the investment is attributed to different aspects of market transparency and employ the augmented panel regression method for investigation of the intra- and international determinants of the investment.

Details

Journal of Property Investment & Finance, vol. 37 no. 5
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 1 September 2000

Index by subjects, compiled by K.G.B. Bakewell covering the following journals: Facilities Volumes 8‐17; Journal of Property Investment & Finance Volumes 8‐17; Property…

Abstract

Index by subjects, compiled by K.G.B. Bakewell covering the following journals: Facilities Volumes 8‐17; Journal of Property Investment & Finance Volumes 8‐17; Property Management Volumes 8‐17; Structural Survey Volumes 8‐17.

Details

Facilities, vol. 18 no. 9
Type: Research Article
ISSN: 0263-2772

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