Why Real Estate?

Hudson‐Wilson, Susan

doi:10.3905/jpm.2001.319820

Cited by 28 publications

(18 citation statements)

References 11 publications

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“…Equity REITs, such as diversified REITs, health care REITs, hotel REITs, industrial REITs, office REITs, residential REITs, retail REITs, and self-storage REITs, however, are suitable for diversification. Overall, consistent with Hudson-Wilson, Fabozzi, and Gordon [2003], we verify the economic significance of REIT investment from the perspective of asset allocation.…”

Section: Resultssupporting

confidence: 79%

“…Hudson-Wilson, Fabozzi, and Gordon [2003] show that real estate can play a significant role in a mixed-asset portfolio, enhancing portfolio performance. A complicated and lengthy evaluation process and the illiquidity of real estate often deter individual investment, but real estate investment trusts (REITs) have since the 1960s securitized real estate into tradable assets to broaden the investment spectrum for investors.…”

mentioning

confidence: 98%

“…Not until the 1970s did institutional investors start to show an interest in real estate in the United States (see Bernstein [2003]). Hudson-Wilson, Fabozzi, and Gordon [2003] cite five primary reasons for considering real estate for inclusion in an investment portfolio. The first is reduction in the overall risk of a portfolio when one combines asset classes that respond differently to expected and unexpected events.…”

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confidence: 99%

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Real Estate Investment Trusts

Chen

et al. 2005

JPM

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Section: Resultssupporting

confidence: 79%

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confidence: 98%

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confidence: 99%

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Real Estate Investment Trusts

Chen

et al. 2005

JPM

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“…Furthermore, there Evidence from Asian real estate markets was an increasing concern on contagion across real estate markets in recent years. According to Hudson-Wilson et al (2003), real estate can reduce overall portfolio risk, achieve high absolute returns and hedge unexpected inflation or deflation. Hence there are additional motivations for investors to include real estate in their portfolio.…”

Section: Introductionmentioning

confidence: 99%

Shall we buy and hold? Evidence from Asian real estate markets

Hui

Yam

Wright

et al. 2014

Journal of Property Investment &Amp; Finance

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Purpose -The purpose of this study is to verify whether the trading strategy can beat the "buy-and-hold" strategy for the securitized real estate indices of six Asian economies: Hong Kong, China, Japan, Taiwan, Thailand and Malaysia. Design/methodology/approach -This paper constructs a trading strategy from the Shiryaev-Zhou index and tests the strategy on the securitized real estate indices of six emerging Asian economies: Hong Kong, China, Japan, Taiwan, Thailand and Malaysia. The authors compare the resulting profits from using the trading strategy with the resulting profits from using the "buy-and-hold" strategy. The authors consider three cases: no transaction costs, 0.1 percent transaction costs, and 0.2 percent transaction costs. Findings -The results show that the trading strategy the authors constructed generally outperforms the "buy-and-hold" strategy even in the presence of transaction costs. In particular, the authors have a new finding as follows: Thailand and Malaysia's securitized real estate indices fell drastically during the period of observation. However, applying the trading strategy to these two securitized real estate indices can still earn a profit. Practical implications -The trading strategy is particularly useful in protecting investors from huge loss in adverse market conditions. The results can be applied to the field of finance/investment that investors can construct a trading strategy similar to the authors to earn more profits. Originality/value -This study will consider cases where both buying and selling costs exist, so the scenario is more like stock transactions in real-life equity markets. Furthermore, in this paper, for each securitized real estate index, the authors plot a graph to show the holding and non-holding periods under the trading strategy. This would help the authors explain the resulting profit under the trading strategy. This kind of graphical analysis was neglected by Hui and Yam.

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“…The inability of commercial real estate investors to add or remove stock in a timely manner to rebalance investment portfolios is a key dimension of liquidity risk (Anglin and Gao, 2011). The benefits of including real estate in a mixed asset portfolio were made by Hudson-Wilson et al (2003) and more recently by Sa-Aadu et al (2010); however, the risks associated with illiquidity prompt some portfolio investors to exclude real estate from a mixed asset portfolio. For those invested in commercial real estate these assets do not typically comprise more than 7-10 per cent of the total assets held despite the positive attributes of commercial real estate: regular income; a partial hedge against returns from other commonly held assets; and the potential for capital gain (Ling and Naranjo, 1999;Quan and Titman, 1999).…”

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confidence: 99%

Time to completion liquidity in UK commercial real estate investment: 2000‐2008

Scofield

2013

Journal of European Real Estate Research

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Purpose -The purpose of this paper is to provide new insights into asset liquidity in direct commercial real estate investment in the UK. Transaction data provided by four institutional investors of commercial real estate are used to test for changes in asset liquidity as manifest in recorded times from price agreement to deal completion. Median times to completion by stage of the transaction are presented alongside industry estimates. Design/methodology/approach -Stages of the transaction process are modelled and median times per stage calculated to track changes in asset liquidity over, and between, the two periods of the study (2000-2002 and 2005-2008). Real times to completion are considered in conjunction with estimated times compiled through interviews with senior level investment professionals. This paper applies the Wilcoxon rank-sum test to determine the significance of variation in median times across the two study periods. Findings -This paper provides empirical evidence that liquidity increased from 2000 to 2008. Median times from price agreement to completion decreased significantly ( p ¼ 0.015) from 2000-2002 to 2005-2008, indicating an increase in asset liquidity in step with an overall increase in transaction volume. Furthermore, senior investment actors were found to persistently over-estimate transaction efficiency and underestimate liquidity risk when acquiring and disposing of commercial properties. Research limitations/implications -This work offers new insights into the changing nature of asset liquidity over the last decade based on a limited number of transactions. Additional studies involving larger samples of transactions would provide still greater insight into commercial real estate liquidity dimensions. Practical implications -The paper presents evidence of pro-cyclicality; asset liquidity varies positively with overall transaction volumes, and investment actors were found to overestimate asset liquidity suggesting a persistent underestimation of liquidity risk. Originality/value -This paper addresses a gap in the extant literature offering real time on market-time to completion observations alongside investor estimates. Median times to completion have been modelled and presented, together with time estimates provided by industry experts. Also, for first time in real estate research, median times to completion are shown to shorten significantly in-line with increasing transaction volumes.

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Why Real Estate?

Cited by 28 publications

References 11 publications

Real Estate Investment Trusts

Real Estate Investment Trusts

Shall we buy and hold? Evidence from Asian real estate markets

Time to completion liquidity in UK commercial real estate investment: 2000‐2008

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