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Determinants of foreign direct real estate investment in selected MENA countries

Author

Listed:
  • Mohamed Salem
  • Andrew Baum

Abstract

Purpose - – The purpose of this paper is to identify the main determinants of foreign direct real estate investments (foreign direct investment (FDI)) in selected Middle Eastern and North African (MENA) countries. Design/methodology/approach - – The empirical work of this study is an econometric analysis of FDI in the commercial real estate sector for eight MENA markets, namely Algeria, Egypt, Morocco, Qatar, Saudi Arabia, Turkey, Tunisia and the UAE during the period 2003-2009. The econometric analysis is carried out using the pooled Tobit model technique for panel data. Findings - – The paper finds that both country-specific factors and real estate sector-specific variables consistently support hypotheses explaining commercial real estate-related FDI, and find evidence that political stability explains why some selected MENA countries attract more real estate investments than other MENA countries. Practical implications - – The findings should be seriously considered in any policy making effort on the part of governments in the region. Originality/value - – The authors contribute to the existing literature in many ways. First, the study aims to develop econometric models, using both conventional and unique variables, to be generalised and applied to any developed or emerging market. The study applies relevant techniques in estimating the models, including the pooled Tobit model. Second, the research studies eight selected MENA real estate markets from 2003 to 2009, a timeframe and geography not examined in previous published empirical work on commercial real estate investments. Lastly, and for the first time in real estate literature, the study applies the location dimension of Dunning’s OLI paradigm as a theoretical explanation for the behaviour of foreign investors in commercial real estate towards the selected MENA markets.

Suggested Citation

  • Mohamed Salem & Andrew Baum, 2016. "Determinants of foreign direct real estate investment in selected MENA countries," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 34(2), pages 116-142, March.
    • Handle: RePEc:eme:jpifpp:v:34:y:2016:i:2:p:116-142
    DOI: 10.1108/JPIF-06-2015-0042
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    Citations

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    Cited by:

    1. Vo, Xuan Vinh, 2018. "Determinants of capital flows to emerging economies - Evidence from Vietnam," Finance Research Letters, Elsevier, vol. 27(C), pages 23-27.
    2. Hsieh, Hui-Ching & Boarelli, Sofia & Vu, Thi Huyen Chi, 2019. "The effects of economic policy uncertainty on outward foreign direct investment," International Review of Economics & Finance, Elsevier, vol. 64(C), pages 377-392.
    3. Mustafa ŞİT, 2019. "The Determinants of Foreign Direct Investments in Real Estate: Turkey Case," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 5(3), pages 789-795, 03-2019.
    4. Mohammad Razib Hossain, 2021. "Inward foreign direct investment in Bangladesh: Do we need to rethink about some of the macro-level quantitative determinants?," SN Business & Economics, Springer, vol. 1(3), pages 1-23, March.
    5. Majed Alharthi, 2022. "Factors of foreign direct investment inwards: The case of Saudi Arabia," Proceedings of Economics and Finance Conferences 13015491, International Institute of Social and Economic Sciences.

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