The Inflation Hedging Ability of Real Estate in China

Zhou, Xiaorong; Clements, Sherwood

doi:10.1080/10835547.2010.12089885

Cited by 26 publications

(38 citation statements)

References 32 publications

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“…The findings of this study refuted the result obtained from earlier studies conducted in the US by Fama & Schwert (1977) and in Korea by Park and Bang (2012), similarly it refutes the findings of the study conducted in some third world countries by Terahni, Zarei and Parirokh (2012) which concluded that real estate provides complete hedge against inflation. However, the study was found to be congruent with the findings of Bello (2005), Zhou and Clements (2010) and Arnasson & person (2012). The authors respectively found that real estate provides perverse hedges against actual inflation as seen in this study.…”

Section: Resultssupporting

confidence: 89%

“…From the study, it was seen that real estate investment does not hedge against inflation in Nigeria. In China, Zhou and Clements (2010) investigated the inflation hedging ability of real estate for the period between 2000 and 2008. The methodology employed adopted the Autoregressive Integrated Moving Average (ARIMA), stationarity or unit root test and the Engle and Granger cointegration techniques.…”

Section: Literature Reviewmentioning

confidence: 99%

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Impact of Inflation on Indirect Real Estate Investments in Nigeria

Dabara¹,

Chiwuzie²,

Omotehinshe³

et al. 2019

26th Annual European Real Estate Society Conference

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The study aims at investigating the impact of inflation on securitized real estate investments in Nigeria with a view to providing information to aid real estate investors in making informed investment decisions. The timeframe for the study covers between 2007 and 2016. All the securitized real estate investments including both REITs and non REITs were captured in the study. The population for the study comprised of all securitized real estate companies in Nigeria namely: Skye Shelter Fund REITs, Union Home REITs, UPDC REITs and UACN properties. Data for the study were collected from the databases of the securitized real estate companies covering the study period. The data collected comprised of share prices and dividends of the respective companies as well as inflation rates obtained from the Nigerian National Bureau of Statistics (NBS). The data were analyzed by means of both descriptive statistical tools such as frequencies, mean scores and percentages; and inferential statistical tools such as regression models. Findings from the study revealed that the return profile of REITs and non REITs equities in Nigeria from 2007 to 2016 had experienced some level of volatility with the non REITs outperforming the REITs investment asset (the highest returns obtained from REITs investment was 5.43%, while the highest returns for the non REITs was 41.79%). Inflation was seen to be mostly in double digits and had kept increasing throughout the study period, ranging between 4.37 and 18.45. Analysis of the relationship between indirect real estate investment returns and inflation in the study area revealed negative Beta coefficients for both REITs and non REITs investments in the study area. This was indicated by a beta coefficient of -0.127 and -0.225 for REITs and non REITs asset classes respectively. This results suggested a perverse hedging characteristics for all the securitized real estate investments in the study area. This study have implications for individual and institutional real estate investors. The result of this study can be useful for investment forecast and investment decisions as regards to the type of asset to include in an investor's portfolio, taking to consideration the impact of inflation on such asset(s).

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Section: Resultssupporting

confidence: 89%

Section: Literature Reviewmentioning

confidence: 99%

Impact of Inflation on Indirect Real Estate Investments in Nigeria

Dabara¹,

Chiwuzie²,

Omotehinshe³

et al. 2019

26th Annual European Real Estate Society Conference

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“…From the analysis above, it can be inferred that capital values of office and shop properties in the study area had like the rental values also had a steady and consistent growth rate over the study period and this growth rate is likely to be maintained over the next three years as seen from the predictive trendlines. This is congruent with the study carried out by Zhou and Clements (2010). Table 5 presented the income, capital and total returns of investments in both office and shop properties accordingly.…”

Section: Figure 1: Trend Analysis Of Rental Values In Ibadan From 200supporting

confidence: 86%

The Trends in Commercial Property Values in an Emerging Real Estate Market: The Case of Ibadan Metropolis, Nigeria

Dabara¹,

Oyewole²,

Taderera³

2015

Real Estate Markets Development: Meeting the Challenge, Making the Difference - The 15th African Real Estate Society Conference

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This study aims at examining the trends in commercial property's rental, capital and returns values from 2002 to 2014 in Ibadan metropolis, Nigeria with a view to providing information for investment decision making. DESIGN/METHODOLOGY/APPROACH:Questionnaire survey was conducted to collect data on rental and capital values from investments in commercial properties in Ibadan metropolis. The data were collected from partners/branch managers of Estate Surveying and Valuation Firms in the study area. There were 56 estate surveying and valuation firms in Ibadan with an average of 2,072 commercial properties in their management portfolios (an average of 37 properties in each management portfolio). A total enumeration of the 56 firms was conducted using structured questionnaire; however, only 31 questionnaires were completed and returned for analysis (representing 55% response rate). Descriptive statistics was used in analysis of the data obtained, hence the use of frequencies; percentages; income, capital and total returns formulae; weighted mean; growth rate formulae and trend analysis. FINDINGS: The study found that there was a steady and continuous increase in both the rental and capital values of the selected property types throughout the study period. This was depicted by the trendlines generated from data obtained from the field as well as the annual average growth rates calculated (8.35%, 8.1%, 10.3% and 6.3% for office rental values, shop rental values, office capital values and shop capital values respectively). The income, capital and total returns for investments in office property type were observed to have an average of 4.40%, 6.58% and 10.98% respectively. Similarly, the average income, capital and total returns on investments in shop property type were seen to be 4.62%, 5.19% and 9.82% respectively. The income, capital and total returns values indicated positive returns values for both office and shop properties throughout the study period. PRACTICAL IMPLICATIONS: Due to the dynamism and property market immaturity associated with emerging property markets of developing nations, investors may want to ascertain the trends of returns behavior of real estate investments so as to serve as a guide for their investment decision making, hence this study. ORIGINALITY/VALUE: This study is unique as it gathered historical data on commercial property investments behaviour and made future forecast or predictions of possible investment behaviour of returns values in an emerging property market which could serve as a guide to property investors in making investment decisions.

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“…They found that the inflation hedging features of real estate exist but the degree varied significantly across the different markets. Surprisingly, China's real estate does not seem to provide a hedge against inflation as uncovered by Chu and Sing (2004) and Zhou and Clements (2010). In the context of Taiwan, Fang, Wang and Nguyen (2008) used monthly data to examine Taiwan's real estate prices over the period of 1991-2006.…”

Section: Real Estatementioning

confidence: 99%

Inflation Hedging Properties of Different Asset Classes in Malaysia

Lee

Isa

2019

AJBA

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Manuscript type: Research paper Research aims: The objective of this study is to examine the inflation hedging properties of various asset classes (stock, gold, real estate, Treasury bond and Treasury bill) in the Malaysian context. Design/Methodology/Approach: This is an empirical analysis using quarterly data from the period of 1980 to 2016. The Autoregressive Distributed Lag (ARDL) bounds cointegration model is used for testing the long-run relationship while the error correction model (ECM) is used for testing the short-run dynamics. Research findings: Our results show that stocks and government bonds in Malaysia can provide a complete hedge against inflation in the long-run while real estate shows partial hedging evidence. Gold and Treasury bills, however, are not inflation hedges. For the shortrun, stocks, gold and real estate show evidence of rapid adjustment to changes in inflation while government securities indicate a mild adjustment. Theoretical contributions/Originality: First, this study provides new evidence on inflation hedges from the perspective of an emerging market. Second, this study uses the ARDL and ECM approach to study the long-run and short-run dynamics of asset returns and inflation. This is in contrast to many previous studies that mainly used the Ordinary Least-Squares (OLS) analysis. Third, this study is important for the Malaysian market because previous studies in

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The Inflation Hedging Ability of Real Estate in China

Cited by 26 publications

References 32 publications

Impact of Inflation on Indirect Real Estate Investments in Nigeria

Impact of Inflation on Indirect Real Estate Investments in Nigeria

The Trends in Commercial Property Values in an Emerging Real Estate Market: The Case of Ibadan Metropolis, Nigeria

Inflation Hedging Properties of Different Asset Classes in Malaysia

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