Property investment decision making by Australian REITs

Abstract

Purpose– The purpose of this paper is to investigate property investment decision making by Australian REITs.Design/methodology/approach– Through an extensive literature review, a normative model of the property investment decision-making process is proposed. Based on semi-structured interviews with senior Australian REIT decision makers, a descriptive model of the property investment decision-making process by Australian REITs is developed. The normative model and descriptive model are compared and a prescriptive model of the Australian REIT property investment decision-making process proposed.Findings– With the four stage, 20-step process proposed in the normative model found to be generally supported by the descriptive model developed, this may potentially comprise an effective prescriptive model for the Australian REIT property investment decision-making process.Research limitations/implications– Further research is required to investigate if the prescriptive model is generalisable across other property investment decision-making groups or over time and whether it may lead to “good” decisions.Practical implications– The prescriptive model proposed may contribute consistency and transparency to the decision-making process, if adopted by Australian REITs, potentially leading to better decisions.Social implications– Greater consistency and transparency in property investment decision making by Australian REITs may lead to the optimal allocation of capital and greater investor confidence in the sector.Originality/value– The findings comprise the first prescriptive model of the Australian REIT property investment decision-making process, forming a basis for comparative investigation of that process adopted by other property investment decision-making groups.