IDEAS home Printed from
   My bibliography  Save this article

Diversification as a Value-Adding Strategy for Asian REITs: A Myth or Reality?


  • Shan Min Charmaine Cheok

    () (Citicorp Investment Bank Singapore)

  • Tien Foo Sing

    () (Department of Real Estate, National University of Singapore)

  • I-Chun Tsai

    () (Department of Finance, National University of Kaohsiung)


This study tests the impact of diversification strategies on the cash flows, expenses, risks and returns of REITs in Asia. Hirschman-Herfindahl indices (HHI) are computed based on 2281 properties owned by 63 sample Asian REITs for the periods from 2002 to 2007 to measure the levels of diversification by property type and geographical region. In our empirical tests that use weighted least square regressions, we find no significant effects of diversification by property types on cash flows, expenses and risk premiums of Asian REITs. However, significant variations in expenses and risk premiums of the REITs are explained by a geographical diversification strategy. REITs with assets distributed across different countries incur higher total expenses, interest expenses, general and administrative expenses and capital expenditure. Regionally diversified REITs have higher risk premiums. The results remain unchanged after controlling for country factor and simultaneity between the cash flows, expenses, risk and return variables.

Suggested Citation

  • Shan Min Charmaine Cheok & Tien Foo Sing & I-Chun Tsai, 2011. "Diversification as a Value-Adding Strategy for Asian REITs: A Myth or Reality?," International Real Estate Review, Asian Real Estate Society, vol. 14(2), pages 184-207.
  • Handle: RePEc:ire:issued:v:14:n:02:2011:p:184-207

    Download full text from publisher

    File URL:
    File Function: Full text
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Wichita State University, 2016. "Contagion, Interdependence and Diversification across Regional UK Housing Markets," International Real Estate Review, Asian Real Estate Society, vol. 19(3), pages 327-351.
    2. Su Han Chan & Ko Wang & Jing Yang, 2016. "The Pricing of Construction Loans," International Real Estate Review, Asian Real Estate Society, vol. 19(4), pages 411-434.

    More about this item


    Diversification and focus strategies; Asian REITs; Illiquidity premiums;

    JEL classification:

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


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ire:issued:v:14:n:02:2011:p:184-207. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (IRER Secretary Office/Webmaster). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.