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Investigating the regional sustainable performance of the Chinese real estate industry: A slack-based DEA approach

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  • Yang, Guo-liang
  • Fukuyama, Hirofumi
  • Chen, Kun

Abstract

This paper aims to investigate the regional sustainable performance of real estate industry of 30 sample provinces on China's mainland from 2007 to 2013, based on a slack-based data envelopment analysis (DEA) approach. We assume that the real estate industry operates with a dynamic three-stage network process. The proposed model specification is dynamic because carryover variables produced in a previous period that constrain the current production are considered. The empirical results show the major findings: (a) the growing speeds of Assets, Completed investment on land and Completed investment in houses are far faster than that of gross domestic product (GDP) in the same period, which indicates the possibility of too much existing investment; (b) the inefficiency status of the Chinese real estate industry increased after 2012; (c) there is severe imbalance among different provinces; (d) there is a need to improve the operational efficiencies of real estate industries in some provinces, especially Qinghai, Gansu, Ningxia, Xinjiang, Hainan, Guizhou, and Shanxi; and (e) GDP and Price of commercial real estate both have negative effects on slack-based inefficiency, on average, in the examined period. (f) The Herfindahl-Hirschman index and other variables can be used to explain the level and difference in inefficiency bias over time and across regions. Based on those findings, we propose several policy suggestions for sustainable development of Chinese real estate industry.

Suggested Citation

  • Yang, Guo-liang & Fukuyama, Hirofumi & Chen, Kun, 2019. "Investigating the regional sustainable performance of the Chinese real estate industry: A slack-based DEA approach," Omega, Elsevier, vol. 84(C), pages 141-159.
    • Handle: RePEc:eee:jomega:v:84:y:2019:i:c:p:141-159
    DOI: 10.1016/j.omega.2018.04.009
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    More about this item

    Keywords

    Data envelopment analysis; Dynamic network model; Three-stage system; Slack-based inefficiency; Chinese real estate industry;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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