Foreign direct investments (FDI) have been one of the core features of globalization and the world economy over the past two decades. Statistical data shows that the level of FDI was continuously increasing during [2003][2004][2005][2006][2007], but the directions and amount of such inflows differs significantly between the countries. Investments in real estate are just one of these inflows and European countries proved to be successful in this process. The objective of this study is to highlight theoretical and empirical findings about determinants of foreign direct investment in real estate in developed European countries. This paper first present and analyze existing scientific theories in this area with special attention to real estate investments, then focuses on assessing the relative significance of the factors that may attract FDI in real estate via a panel data regression analysis for a representative sample consisting of 15 OECD countries for 1996-2007. Results of the study suggest that certain variables such as size of GDP, human capital and road infrastructure appear to be robust under different specifications. Significance of these factors estimates are also observed, confirming the relevant theoretical propositions. However, certain differential variables that expected to have positive effect proved to be insignificant within the estimated data sample.
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