Transparency, Integration, and the Cost of International Real Estate Investments

Abstract

This paper investigates the importance of market institutions for the performance of international property investors during the 1996-2007 period. The results show that international property companies underperform local property companies in the early years of the sample period. This underperformance is driven by the political environment, the level of economic integration, and the transparency of the real estate market in target countries. The underperformance of internationals disappears in the later years of the sample period, and so does the significance of the aforementioned factors in explaining performance differences among international companies. These findings suggest that the increased transparency of the global real estate industry has leveled the playing field for foreign property investors.

Does Real Estate Transparency Matter for Foreign Real Estate Investments?

“…The conclusions are contradictory: one set of researchers support a positive relationship between RET and FREI (e.g. Eichholtz et al 2011;Falkenbach 2009;Schulte et al 2005) and the second view argues that the relationship is negative or insignificant (e.g. JLL 2008JLL , 2006.…”

Information, uncertainty, and behavioral effects: Evidence from abnormal returns around real estate investment trust earnings announcements

“…Eichholtz et al (2011) show that increased global transparency has leveled the playing field for foreign real estate investors, while Eichholtz et al (2001) provide evidence on the benefits of including public real estate securities in property investors' portfolios.…”

Real Estate Investment as a Panacea for Economic Instability in Nigeria: Evidence from Northeastern States of Nigeria

“…For any investment to flourish one has to make any aspect of the business feasibility and viability studies for proper dealings and carefulness from avoiding fraudulent business, real estate business has less harm if the owner or the buyer makes a proper investigation of the subject matter. An increase in international real estate capital flows could foster increasing demand for stronger institutions across global real estate market [2,13,28,31,37]. A number of article have argued that real estate investment has realized tremendous positive abnormal risk adjustment returns [13], return on real estate investment is certain as rent or prestige as indicated by [32].…”

“…An increase in international real estate capital flows could foster increasing demand for stronger institutions across global real estate market [2,13,28,31,37]. A number of article have argued that real estate investment has realized tremendous positive abnormal risk adjustment returns [13], return on real estate investment is certain as rent or prestige as indicated by [32]. Sale or lease of parcel of land by a speculator or prospective seller to willing buyer entails good returns to the seller and asset possession to the willing buyer.…”