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The Determinants of International Commercial Real Estate Investment

The Journal of Real Estate Finance and Economics volume 48, pages 611–659 (2014)Cite this article

Abstract

We examine the determinants of international commercial real estate investment using a unique set of panel data series for 47 countries worldwide, covering the period from 2000 to 2009. We explore how different socio-economic, demographic and institutional characteristics affect commercial real estate investment activity by determining both cross-sectional and time-series estimators, running augmented random effect panel regressions. We provide evidence that economic growth, rapid urbanization and compelling demographics attract real estate investment, and also demonstrate that a lack of transparency in the legal framework, administrative burdens of doing real estate business, socio-cultural challenges and political instabilities reduce international real estate allocations.

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Notes

  1. Dunning (1977, 1980, 1981, 1995, 2000, 2001 and 2006).

  2. The detailed correlation matrix can be provided on request.

  3. Please note that a high inflation rate is unattractive for investment activity. The previous rescaling of the raw-data leads to the positive sign of the “inflation” estimators.

  4. Please note that a high tax rate is unattractive for investment activity. The previous rescaling of the raw-data leads to opposite signs of the “tax rate” estimators.

  5. Lee (2006) uses property returns from the Investment Property Database (IPD).

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Author information

Authors and Affiliations

  1. Research Affiliate of the International Centre of Financial Research, IESE Business School, Avenida Pearson 21, 08034, Barcelona, Spain

    Karsten Lieser

  2. EMLYON Business School, 23 Avenue Guy de Collongue, 69134, Ecully, France

    Alexander Peter Groh

Authors
  1. Karsten Lieser
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  2. Alexander Peter Groh
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Correspondence to Alexander Peter Groh.

Appendix

Appendix

Table 12 Description of the data sample and sources
Full size table

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Lieser, K., Groh, A.P. The Determinants of International Commercial Real Estate Investment. J Real Estate Finan Econ 48, 611–659 (2014). https://doi.org/10.1007/s11146-012-9401-0

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Keywords

  • Real Estate Investment
  • International Asset Allocation
  • Real Estate Market Attractiveness
  • Augmented Random Effect Panel Regression

Classification JEL

  • C33
  • C23
  • G11
  • G23
  • G24
  • O16
  • O18
  • P25
  • P52