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Do Economies of Scale Exist? : Evidence from Korean REITs

Author

Listed:
  • Changha Jin

    (Hanyang University)

  • Kwanyoung Kim

    (Hanyang University)

Abstract

Although real estate investment trusts (REITs) in Korea (K-REITs) have a history of over a decade, little related academic research exists due to many constraints, including the lack of available data. This research is the first attempt to examine a total of 74 REIT companies by using data from the Korea Association of Real Estate Investment Trusts. In this study, we explore the economies of scale of both private and public REITs in Korea. Initially, we construct an equivalent baseline measure for growth prospects, revenue and expenses, and profitability, and thereby compare private and public K-REITs. This study further explores the return determinants for K-REITs with a range of firm-specific and property-specific variables. The results show that the asset size of K-REITs matters in determining growth prospects, wherein revenue and expenses and profitability are interrelated. Furthermore, the ownership structure of K-REITs influences the return measure.

Suggested Citation

  • Changha Jin & Kwanyoung Kim, 2017. "Do Economies of Scale Exist? : Evidence from Korean REITs," International Real Estate Review, Global Social Science Institute, vol. 20(3), pages 349-374.
    • Handle: RePEc:ire:issued:v:20:n:03:2017:p:349-374
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Public REITs; Private REITs; Growth Prospects; Economies of Scale;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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