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Book part
Publication date: 28 August 2013

Gary A. Patterson

The real estate market has evolved significantly over the past 10 years and has experienced rapid growth throughout the world in its various forms. Many emerging countries…

Abstract

The real estate market has evolved significantly over the past 10 years and has experienced rapid growth throughout the world in its various forms. Many emerging countries witnessed the significant growth in their commercial real estate markets that became a stable sector of their economies. These countries, after developing a reliable commercial real estate base within their economies subsequently developed real estate financial markets. The growth of the real estate investment trusts, REITs, markets in many countries within the past decade helped attract global capital that facilitated additional investments in local real estate developments. Significantly, this period of time may have witnessed a higher degree of integration of real estate with the broader financial markets due in large part to the securitization of mortgages. Yet the general real estate market was also impacted in many parts of the world with rising prices and subsequent price collapses. This section focuses on the various areas of the global real estate market and the changes that it has encountered as examined by researchers of real estate. This chapter also examines the recent trends in global real estate markets and explores how these changes have affected the broader investment community.

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International Financial Markets
Type: Book
ISBN: 978-1-78190-312-4

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Article
Publication date: 11 July 2008

Ermina Topintzi, Henry Chin and Peter Hobbs

This paper aims to explore the steps that need to be taken in developing a measure of global performance for direct real estate.

Abstract

Purpose

This paper aims to explore the steps that need to be taken in developing a measure of global performance for direct real estate.

Design/methodology/approach

The paper starts by reviewing the major considerations concerning the available real estate performance series across the world. The paper explains the steps that work through the obstacles of deriving an aggregate performance measure for each of the three regions and then combining them to get a global property returns series. Back‐casting series and weighting assumptions are also covered.

Findings

Based on the preliminary results, the paper explores the correlations in the results between different countries, and the performance of “global” property relative to other major asset classes. The paper concludes by drawing out the research issues and implications, and the steps for further research.

Practical implications

Many challenges are involved in the construction of a global index of direct real estate market performance. On the one hand these are associated with the nature of real estate, which tends to be relatively illiquid and immature as an asset class. On the other, there are significant variations in the quality of data availability across countries. IPD has played a huge role in generating consistent data series across countries, and this increases the ability to move towards a “global index” of direct market performance.

Originality/value

The study examines the increasing need for a global performance benchmark for direct real estate and the way a practitioner approaches the limitations and challenges involved in constructing one.

Details

Journal of Property Investment & Finance, vol. 26 no. 4
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 post…

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. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 30 July 2020

Radoslaw Wisniewski and Justyna Brzezicka

This paper aims to analyse globalisation, localisation and glocalisation on the real estate market and define the characteristic features of a glocal real estate market…

Abstract

Purpose

This paper aims to analyse globalisation, localisation and glocalisation on the real estate market and define the characteristic features of a glocal real estate market (GREM). The GREM involves real estate properties and real estate products, as well as linking the local and global dimensions of real estate market. Further aims of the study were to provide a methodology for developing the glocal real estate market index (GREMI), and compare selected European markets by analysing their glocalisation potential.

Design/methodology/approach

A novel method of identifying and assessing the GREM was prepared in the work. The methodology provides tools for calculating the GREMI. This is an index based on a few dozen variables from various thematic scopes, describing the glocalisation potential of a selected market, calibrated to a range <0, 1>. GREMI values were calculated for 12 countries, which accessed European Union (EU) in 2004. The sample covers period from 2004 to 2017.

Findings

The study shows that the GREMI continues to increase in all countries over time and the results are becoming synchronised. Romania is a country with the highest number of minimum GREMI values in all years (2004–2017). The highest values of the GREMI were determined in Estonia over the period of nine years (2004–2006, 2008 and 2013–2017).

Research limitations/implications

The prepared index may be applied to analyse different real estate markets, though the necessity to select an identical set of variables for analysis to allow for comparing between markets is a limitation for applying the method. The actual selection of variables is also a study limitation, which was of an opening nature to research in this scope and may be disputable.

Originality/value

This paper provides the original methodology of the GREMI index for countries joining the EU from 2004 onwards.

Details

Journal of European Real Estate Research , vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-9269

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Article
Publication date: 4 July 2016

Graeme Newell

Real estate market transparency is an important factor in real estate investment and occupier decision making. The purpose of this paper is to assess real estate

Abstract

Purpose

Real estate market transparency is an important factor in real estate investment and occupier decision making. The purpose of this paper is to assess real estate transparency over 2004-2014 to determine whether the European real estate markets have become more transparent in a regional and global context.

Design/methodology/approach

Using the JLL real estate transparency index over 2004-2014, changes in real estate market transparency are assessed for 102 real estate markets. This JLL real estate market transparency index is also assessed against corruption levels and business competitiveness in these markets.

Findings

Improvements in real estate transparency are clearly evident in many European real estate markets, with several of these European real estate markets seen to be the major improvers in transparency from a global real estate markets perspective.

Practical implications

Institutional investors and occupiers see real estate market transparency as a key factor in their strategic real estate investment and occupancy decision making. By assessing changes in real estate transparency across 102 real estate markets, investors and occupiers are able to make more informed real estate investment decisions across the global real estate markets. In particular, this relates to both investors and occupiers being able to more fully understand the risk dimensions of their international real estate decisions.

Originality/value

This paper is the first paper to assess the dynamics of real estate market transparency over 2004-2014, with a particular focus on the 33 European real estate markets in a global context to facilitate more informed real estate investment and occupancy decision making.

Details

Journal of Property Investment & Finance, vol. 34 no. 4
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 2 March 2015

Alex Moss and Kieran Farrelly

The purpose of this paper is to provide a better understanding of the performance implications for UK DC pension fund investors who choose to combine global listed and UK…

Abstract

Purpose

The purpose of this paper is to provide a better understanding of the performance implications for UK DC pension fund investors who choose to combine global listed and UK unlisted real estate in a blended allocation relative to a pure unlisted solution.

Design/methodology/approach

Blended listed and unlisted real estate portfolios are constructed. Investor risk and returns are then studied over the full 15 year sample horizon and distinct cyclical phases over this period using a number of risk-return metrics. Performance is then contrasted with that of a pure unlisted solution, as well as UK equity market and bond total returns over the same period.

Findings

A UK DC pension fund investor choosing to construct a blended global listed and UK unlisted real estate portfolio would have experienced material return enhancement relative to a pure unlisted solution. The “price” of this enhanced performance and improved liquidity profile is, unsurprisingly, higher portfolio volatility. However, because of the improved returns, the impact upon measured risk adjusted returns is less significant.

Practical implications

Relatively liquid blended listed and unlisted real estate portfolios create efficient risk and return outcomes for investors.

Originality/value

This study uses actual fund rather than index data (i.e. measures delivered returns to investors), has chosen a global rather than single country listed real estate allocation and is focused on providing clarity around the real estate exposure for a specific investment requirement, the UK DC pension fund market.

Details

Journal of Property Investment & Finance, vol. 33 no. 2
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 12 August 2020

Levent Sumer and Beliz Ozorhon

Under the current Coronavirus Disease 2019 (COVID-19) pandemic circumstances where the gold prices are increasing and the stocks are in free fall, this research aims to…

Abstract

Purpose

Under the current Coronavirus Disease 2019 (COVID-19) pandemic circumstances where the gold prices are increasing and the stocks are in free fall, this research aims to compare the returns of gold prices and Turkish real estate investment trust (T-REIT) index by covering the 2008 global financial crisis, 2018 Turkish currency crisis and 2020 COVID-19 pandemic-based economic crisis periods and examine the effects of the returns of gold and the T-REIT index on each other, a research area that has been limited in the literature.

Design/methodology/approach

For the empirical analysis, vector auto regression model was used, and Augmented Dickey–Fuller and Granger causality tests were also conducted. The average returns were compared with the coefficient of variation analysis.

Findings

The results of the study exhibited that except for the 2008 global financial crisis period, 2018 Turkish currency crisis and 2020 COVID-19 pandemic-based economic crisis, the T-REIT index performs better than gold prices, but it is a riskier instrument, and both investment instruments do not affect the returns of each other. The segmentation of both instruments recommends the fund managers including both tools for diversification of a portfolio.

Research limitations/implications

In Turkey, gold prices are valued based on the fluctuations of the global gold prices, as well as the Turkish Lira/US Dollar currency exchange rates. The effect of the exchange rates may be considered in future studies, and the study may be conducted based on the USD values of the T-REIT index and global gold prices. Further studies may also include the comparison between the T-REIT index returns and a set of commodities such as the Goldman Sachs Commodity Index. This study covered only the first five months of 2020 to analyze the COVID-19 pandemic-based economic crisis initial effects, and a successor study is also recommended by including more new data of the post-COVID-19 pandemic and comparing both results.

Practical implications

The results of the research are expected to contribute to the REIT literature and give insight to investors about their investment choices while including both investment tools in their portfolio, especially for the future conditions of the new COVID-19 pandemic-based economic crisis.

Social implications

The study may provide insight for individuals, especially those who are considering possible investment options in the Turkish real estate market in the post-COVID-19 pandemic crisis.

Originality/value

Gold and real estate have always been considered as important investment instruments. Gold is commonly accepted as a safe haven in the literature, and the REITs are considered as long-term investment instruments by many scholars. While gold prices increase in the windy periods, the returns of real estate investments have more cyclical movements based on mostly the macroeconomic conditions and its integration with stock markets, yet the real estate is a common long-term investment tool, especially because of the regular income it generates for the retirement years. By covering three crisis periods including the COVID-19 pandemic-based economic crisis effects, making research about two important investment tools would contribute to the literature, especially in which the studies in this area were very limited.

Details

Journal of European Real Estate Research , vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-9269

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Article
Publication date: 4 February 2019

Alain Coën and Patrick Lecomte

The purpose of this paper is to analyze and revisit the risk and performance of publicly traded real estate companies from 14 countries over the period 2000–2015, marked…

Abstract

Purpose

The purpose of this paper is to analyze and revisit the risk and performance of publicly traded real estate companies from 14 countries over the period 2000–2015, marked by the unprecedented Global Financial Crisis, in presence of errors-in-variables (EIV) and illiquidity (measured by serial correlation, following Getmansky et al. (2004)).

Design/methodology/approach

The authors extend the seminal work of Bond et al. (2003), and shed a new light on the relative performance of listed real estate before and after the GFC. First, the authors suggest the use of various asset pricing models (APM) including the Fama and French (2015) five-factor APM with global and country-level factors. Second, the authors implement unbiased estimators to correct for the econometric bias induced by EIV in APM. Third, the authors deal with the impact of illiquidity (measured by serial correlation) on the risk properties of international securitized real estate returns.

Findings

The findings show that post-GFC, a radical change in international listed real estate risk factors has resulted in more homogeneous markets internationally and less diversification opportunities for international investors.

Practical implications

The authors suggest the use of robust linear APM (including the Fama and French (2015) five-factor APM) to analyze the risk and performance of publicly traded real estate companies from 14 countries over the period 2000–2015.

Originality/value

The authors analyze and revisit the risk and performance of publicly traded real estate companies from 14 countries over the period 2000–2015, marked by the unprecedented Global Financial Crisis.

Details

Journal of Property Investment & Finance, vol. 37 no. 1
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 3 July 2017

Stephen Lee

The purpose of this paper is to empirically examine the issue of convergence in the monthly returns, rental growth and yields for ten market segments in the UK direct real

Abstract

Purpose

The purpose of this paper is to empirically examine the issue of convergence in the monthly returns, rental growth and yields for ten market segments in the UK direct real estate market, using monthly data over the period from January 1987 to December 2014.

Design/methodology/approach

The methodology used to determine convergence is principal component analysis as it provides an assessment of the extent to which the variance of the market segments can be represented by a single common factor, explaining their long-run behaviour, and the degree of independence between the market segments.

Findings

The results suggest that there is strong evidence of convergence over the entire sample period in relation to monthly returns and yields but less evidence of convergence in rental growth, which confirms the findings in previous studies in international markets.

Practical implications

The evidence also suggests that convergence has increased over the sample period and that convergence is period specific and was particularly strong during and after the period of the Global Financial Crisis, which implies that the UK direct real estate market is largely integrated and as a consequence the extent of diversification potential in the market is still severely limited.

Social implications

The convergence in returns has crucial implications for investors as it leaves investors exposed to the same structural shocks and so magnifies the importance of volatility spillover effects, limits their ability to create well-diversified portfolios and make it more difficult for fund managers to outperform the market.

Originality/value

This is the first paper to examine the convergence in the UK direct real estate market.

Details

Journal of Property Investment & Finance, vol. 35 no. 4
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 23 November 2010

Linda Too, Michael Harvey and Eric Too

The purpose of this paper is to examine the impact of globalisation on corporate real estate strategies. Specifically, it seeks to identify corporate real estate

Abstract

Purpose

The purpose of this paper is to examine the impact of globalisation on corporate real estate strategies. Specifically, it seeks to identify corporate real estate capabilities that are important in a hypercompetitive business climate.

Design/methodology/approach

This paper utilises a qualitative approach to analyse secondary data in order to identify the corporate real estate capabilities for a hypercompetitive business environment.

Findings

Globalisation today is an undeniable phenomenon that is fundamentally changing the way business is conducted. In the light of global hypercompetition, corporate real estate needs to develop new capabilities to support global business strategies. These include flexibility, network organization and managerial learning capabilities.

Research limitations/implications

This is a conceptual paper and future empirical research needs to be conducted to verify the propositions made in this paper.

Practical implications

Given the new level of uncertainty in the business climate, that is, hypercompetition, businesses need to develop dynamic capabilities that are harder for competitors to imitate in order to maintain what is considered a “momentary” competitive advantage. The findings of this paper are useful to guide corporate real estate managers in this regard.

Originality/value

This paper is original in two ways. First, it applies the strategic management concept of capabilities to corporate real estate. Second, it links the key challenge that businesses face today, i.e. globalisation, to the concept of capabilities as a means to maintain competitive advantage.

Details

Journal of Corporate Real Estate, vol. 12 no. 4
Type: Research Article
ISSN: 1463-001X

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