Understanding the disruption-driven investment decision-making strategy of listed property trusts in New Zealand

Abstract

ABSTRACT Property investors operate in environments characterised by market disruptions, which necessitate their adaptation to changing market environments as they make investment decisions. Although several conceptual models have been proposed to explain property investment decision-making, little is known about how property investors make adaptive decisions amidst market disruptions. By leveraging the tenets of institutionalism to frame this study theoretically, the formal and informal rules that guide the conduct of Listed Property Trusts (LPTs) amidst market disruptions were evaluated in two stages. The first stage involved an extensive review of LPTs’ annual reports for content that described how they have responded to disruptions over an extended period. Consequently, the content analysis provided the basis for in-depth interviews with decision-makers across LPTs to shed light on the disruption-driven investment decision-making strategies of their respective organisations. The research outcome reveals that the adaptive response of LPTs to disruptions involves rational and intuitive components, with decision-makers switching between rational and intuitive reasoning. This study makes original empirical and theoretical contributions to the property investment literature by not only providing insights that can enable and empower property investors to optimise their decision-making amidst disruption, but by also raising psychological issues that may occur in the process.