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What happens during flight to safety: Evidence from public and private real estate markets

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  • Walter I. Boudry
  • Robert A. Connolly
  • Eva Steiner

Abstract

Little is known about the performance of public and private real estate investments during and after flight to safety (FTS). We document that public real estate securities offer a partial hedge during FTS events. In addition, periods with multiple FTS events forecast slower economic growth, resulting in weaker long‐run investment performance of real estate assets. Following FTS, the probability of a drop in real estate cash flows increases by up to 20%, with quarterly cash flow growth rates declining by as much as 27%. Private market real estate price appreciation over the four quarters following FTS is nearly wiped out.

Suggested Citation

  • Walter I. Boudry & Robert A. Connolly & Eva Steiner, 2022. "What happens during flight to safety: Evidence from public and private real estate markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 50(1), pages 147-172, March.
    • Handle: RePEc:bla:reesec:v:50:y:2022:i:1:p:147-172
    DOI: 10.1111/1540-6229.12304
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