Distance and diversification

Abstract

This is the accepted version of the paper.This version of the publication may differ from the final published version. Purpose -The purpose of this paper is to examine whether geographical distance or economic distance offers greater diversification benefits in the UK office market. Permanent repository link:Design/methodology/approach -The real estate investment data for this study come from the Investment Property Databank (IPD) analysis "UK Quarterly Key Centres Q2 2015". We measure the geographical distance between the City of London and 27 local authorities by road distance. We used the market size and employment structure of the local authorities relative to the City of London to calculate economic distance.Findings -The results show that local authorities that are classified on their economic distance show significant negative office rental growth correlations with the City of London. In contrast, geographical distance shows no relationship. Results that are consistent for the overall sample period and for various sub-periods.Practical implications -Spatial diversity is a fundamental tenet of real estate portfolio management and the results here show that it is better to diversify across office markets in the UK using the economic attributes of local authorities rather than the physical distance between locations.Originality/value -This is one of only two papers to explicitly examine whether economic distance or geographical distance leads to significantly lower rental growth coefficients between locations in office markets and the first in the UK.

Macroeconomic risk factors and Chinese FDIs in real estate: evidence from the Asia-Pacific public real estate markets

“…As reported by Newell et al. (2010), Lieser and Groh (2014), McAllister and Nanda (2016), Lee (2016), Devaney et al. (2017), Devaney et al.…”

“…A growing literature has been devoted to the analysis of economic, political and environmental determinants, of Chinese FDI, and more rarely FDIRE. As reported by Newell et al (2010), Lieser and Groh (2014), McAllister and Nanda (2016), Lee (2016), Devaney et al (2017), Devaney et al (2019) and very recently by Su et al (2021), these determinants are common to international commercial real estate investments. They include market size, bilateral trade, Chinese holding of foreign exchange reserves, exchange rate, government policy, recipient's policy and political risk (Su et al, 2021), financial cost, property prices, transparency in the real estate market (Newell, 2016;Jones Lang LaSalle, 2022), population and taxation.…”

Strategic management of the portfolio of urban real estate: research of the current scientific knowledge

“…The range of topics covered by the abstracts is extensive. They deal with investment strategies on real estate markets [9,10], systems and methods [11][12][13], performance measurements and valuations [13][14][15][16], the impact of actors and/or participation [17][18][19], the role of fund managers [20] land ownership and management [21,22], the relationship between business and finance [23,24], the control function of state institutions and/or legislation [25][26][27][28], and many other aspects. In addition, the abstracts suggest that only a very small number of texts handle municipal real estate assets as one holistic portfolio.…”

“…In addition, the abstracts suggest that only a very small number of texts handle municipal real estate assets as one holistic portfolio. Researchers tend to prefer individual buildings [29] or sub-portfolios composed of the same type, such as the housing sector [30], office market [9], public utilities [31], heritage [32] etc.…”