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Institutional Factors and Real Estate Returns - A Cross Country Study

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Abstract

This study provides an empirical study on the relationship between institutional factors and real estate returns. Using data from both developed and emerging market countries, our empirical results show that institutional factors do influence real estate returns and these factors may not be fully priced. We find that when controlling return volatility and level of economic growth, a higher property return is expected in countries where the economy is more efficient and has more economic freedom. Our results support the view that the combination of "lumpiness" of real estate investment and the volatile nature of international capital flows may expose property investors to extra investment risk, which needs to be compensated. Our results also indicate that an improvement in a country's economic efficiency and economic freedom may reduce property variance risk thus enhancing property returns.

Suggested Citation

  • Hsien-hsing Liao & Jianping (J.P.) Mei, 1999. "Institutional Factors and Real Estate Returns - A Cross Country Study," International Real Estate Review, Asian Real Estate Society, vol. 2(1), pages 21-34.
  • Handle: RePEc:ire:issued:v:02:n:01:1999:p:21-34
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    Cited by:

    1. Karsten Lieser & Alexander Groh, 2014. "The Determinants of International Commercial Real Estate Investment," The Journal of Real Estate Finance and Economics, Springer, vol. 48(4), pages 611-659, May.
    2. Piet Eichholtz & Nils Gugler & Nils Kok, 2011. "Transparency, Integration, and the Cost of International Real Estate Investments," The Journal of Real Estate Finance and Economics, Springer, vol. 43(1), pages 152-173, July.

    More about this item

    Keywords

    Economic Freedom index; Institutional Investors' Country Credit Ratings;

    JEL classification:

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

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