IDEAS home Printed from
   My bibliography  Save this paper

Cross-Border Capital Flows into Real Estate


  • Andrew E. Baum
  • Franz Fuerst
  • Stanimira Milcheva


Cross-border capital flows into real estate are marked by sharp inequalities among countries. Hypothetically, each country should receive capital flows commensurate with the size of its respective economy or, more accurately, the total size of its investible real estate market. In contrast to this hypothesis, the observed capital flows deviate substantially from this 'naive equilibrium' not only in the short run but persistently throughout economic cycles and long-run economic development trajectories. One of the possible explanations for the long-term aberration from expected values are institutional barriers encompassing a broad range of economic, legal and political risks as well as more intangible cultural factors. This study sets out to empirically test for the existence and significance of these barriers by investigating a unique database comprising real estate flow data and a large number of other economic and property market indicators.Following the above observation, we test for deviations of observed capital flows from expected capital flows using a regression framework. Given that cross-border real estate investment activity in each country should be directly proportional to the size of the investible or institutional-grade stock, and observed activity will be different from hypothesised levels, we investigate the determinants of any deviations we find, focussing on economic development, market transparency, rule of law and cultural factors. Based on earlier empirical studies, we expect that excess cross-border capital flows are driven by high GDP per capita, high real estate market transparency and low barriers to market entry. We expect that all countries 'punching above their weight' achieve high scores on all these factors and vice versa.

Suggested Citation

  • Andrew E. Baum & Franz Fuerst & Stanimira Milcheva, 2013. "Cross-Border Capital Flows into Real Estate," ERES eres2013_50, European Real Estate Society (ERES).
  • Handle: RePEc:arz:wpaper:eres2013_50

    Download full text from publisher

    File URL:
    Download Restriction: no


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

    Cited by:

    1. Barra McCarthy, 2019. "Real estate fund investment in post-crisis Ireland," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Are post-crisis statistical initiatives completed?, volume 49, Bank for International Settlements.
    2. Bienert, Sven & Sebastian, Steffen P. & Just, Tobias, . "Niedrigzinsumfeld und die Auswirkungen auf die Immobilienwirtschaft," Beiträge zur Immobilienwirtschaft, University of Regensburg, Department of Economics, number 8, December.
    3. Viesturs Jānis & Auziņš Armands & Štaube Tatjana, 2017. "Arguments Used for Restricting International Real Property Transactions: Case Study of Latvia," Baltic Journal of Real Estate Economics and Construction Management, Sciendo, vol. 5(1), pages 62-75, November.
    4. Steven Devaney & David Scofield & Fangchen Zhang, 2019. "Only the Best? Exploring Cross-Border Investor Preferences in US Gateway Cities," The Journal of Real Estate Finance and Economics, Springer, vol. 59(3), pages 490-513, October.

    More about this item

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

    NEP fields

    This paper has been announced in the following NEP Reports:


    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:arz:wpaper:eres2013_50. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Architexturez Imprints (email available below). General contact details of provider: .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.