Foreign Real Estate Investment Research Articles

Chinese Foreign Real Estate Investment and Voting in U.S. Presidential Elections

Few economic issues affect people as personally and universally as housing. Yet despite the increasing globalization of housing markets, little is known about its political implications. This study investigates whether rising Chinese investments in U.S. homes influenced local voting in recent U.S. presidential elections. Building on theories of self-interests, sociotropic politics, and nativism, I develop hypotheses on the electoral effects of foreign real estate investment through greater home equity, improved local economies, and increased immigration. Using a series of difference-in-differences designs that combine a unique exogenous shock to Chinese capital outflows in 2013 with original measures of local attractiveness to Chinese investments, I find that greater exposure helped local home prices recover but reduced 2012–2016 presidential vote for the incumbent Democratic Party. Larger white populations exacerbated this negative effect while stronger local economies attenuated it. Contradicting predictions of self-interests, the negative effect exacerbated in areas with high shares of homeowners. Together, the results suggest competing effects driven more by nativist and sociotropic concerns.

Foreign Direct Investment in Real Estate and Related Business Services:Poland vs OECD Countries​

Poland has experienced a relatively large inflow of foreign direct investment (FDI) in the last two decades. FDI has been flowing mainly into services and manufacturing similarly to the trend observed in global capital movement. Within the services, the financial intermediation played the biggest role in terms of attracting FDI, but real estate and related business activities (legal, accounting, auditing, tax, marketing, etc.) also saw a high inflow of foreign capital. The paper analyzes the evolution of inward FDI stock in Poland over the period 1998–2012 with a particular emphasis on real estate and related business activities. It also discusses how Poland differs in terms of sectoral decomposition in the services of inward FDI stock from other Organization for Economic Cooperation and Development (OECD) countries representing both Central and Eastern Europe (CEE) and advanced economies. Finally, the paper answers the question how Poland is performing relative to other OECD members in terms of FDI attractiveness.

Impediments to foreign real estate investment in an emerging market

PurposeThe purpose of this paper is to examine the of characteristics of Lagos, Nigeria property market and its submarkets on the prism of the market practitioners’ characteristics, market transaction structure and market maturity. This is done with a view to provide information capable of improving the flow of foreign real estate investment to the Lagos property market.Design/methodology/approachPrimary data were sourced through questionnaire administered on firms of property practitioners in the market. A total of 190 firms were selected using the stratified random sampling technique based on their geographical location. Descriptive statistics and Mann−Whitney U Test were employed for data analysis.FindingsThe results showed that the Lagos property market was characterised by practitioners whose highest level of education was majorly first degree, and with a mean computer literacy ranking of 3.38 on a five-point Likert scale. Also, major transactions in the market included letting and sales. The market maturity index of the market was 2.95 and therefore adjudged as an emerging market. The analysis also revealed that there was no significant difference in the characteristics of the submarkets.Practical implicationsThe results of the study are capable of enhancing investment decision in the market.Originality/valueThe study differentiates itself from and adds to the previous studies on market characteristics through an examination of the property market on the prism of the market transaction structure, market practitioners’ characteristics and maturity of the market holistically in the context of an African emerging market.

Geographies of hyper‐commodified housing: foreign capital, market activity, and housing stress

AbstractThe latest manifestation of Asian‐led foreign real estate investment in some global cities is contributing to housing becoming a liquid, global asset. Drawing on empirical data about Sydneysiders’ reported levels of real estate market activity, housing stress, and views about foreign real estate investment, we found that those who are financially invested in Sydney's local real estate market are generally more supportive of the presence of foreign investors and investment than are those not invested in that market. We also found that there were no significant comparative differences in beliefs about foreign investment between those who are in housing stress and those who are not. On the strength of those findings, we ask whether a degree of commonality is developing around a set of ideological reference points related to the commodification of housing. As housing in global cities is increasingly commodified and financialized, these ideological reference points could be boosting its commodification across boundaries of cultural difference and political jurisdiction. We conclude by suggesting the need for a new line of inquiry through which scholars could investigate the politics of globalised hyper‐commodified housing in order to expose the ideological reference points that serve to bolster the commodification of housing.

Foreign Direct Investment in Real Estate and Related Business Services: Poland vs OECD Countries

Poland has experienced a relatively large inflow of foreign direct investment (FDI) in the last two decades. FDI has been flowing mainly into services and manufacturing similarly to the trend observed in global capital movement. Within the services, the financial intermediation played the biggest role in terms of attracting FDI, but real estate and related business activities (legal, accounting, auditing, tax, marketing, etc.) also saw a high inflow of foreign capital. The paper analyzes the evolution of inward FDI stock in Poland over the period 1998–2012 with a particular emphasis on real estate and related business activities. It also discusses how Poland differs in terms of sectoral decomposition in the services of inward FDI stock from other Organization for Economic Cooperation and Development (OECD) countries representing both Central and Eastern Europe (CEE) and advanced economies. Finally, the paper answers the question how Poland is performing relative to other OECD members in terms of FDI attractiveness.

Foreign real estate investment, residential tourism and the Australian residential property market

Purpose This research aims to focus on the emerging determinants for the Australian residential property market subsequent to the Global Financial Crisis 2008. Design/methodology/approach Quantitative models built on secondary data were tested on three residential property markets comprising metropolitan Melbourne and two key suburbs in the state of Victoria. The relationship between the house price performances and various leading Australian economic indicators was assessed. Findings As a result of the increasing relevance of Asia Pacific private wealth in the Australian residential property market, non-traditional determinants such as residential tourism have emerged as significant in the Melbourne residential property market. Research limitations/implications The result of this study can provide a better understanding on the relationship between the Australian residential property market and both the existing and emerging leading economic indicators. Originality/value A better understanding of foreign investment activities will assist policymakers to effectively manage inflated Australian residential property market without compromising the steady flow of foreign real estate investment.

Foreign direct investment in the UK real estate market

The aim of this paper is to identify the key factors affecting foreign real estate investment (FREI) in the UK, with a particular focus in London. The panel regression method was used as a data analysis approach for this paper. Two panel regression equations were developed. The first equation has five explanatory variables including GDP, wage, property price, land price and interest rate. The second equation has the sixth explanatory variable, tourists, as well as the five variables used in the first equation. Pearson coefficient analysis was also conducted to identify the correlation between the dependent variable, FREI and the explanatory variables. For the first equation of panel regression analysis showed all five explanatory variables are statistically significant and have an expected impact on FREI. That is GDP and house price, have positive impacts on FREI, while wage, land price and interest rate have negative impacts. For the second equation, all explanatory variables, apart from interest rate and tourists, are statistically significant. Tourists have an unexpected negative impact on FREI. Pearson coefficient analysis showed that FREI has a statistically significant correlation relationship with GDP, wage, house price, land price and interest rate. FREI also has a positive relationship with all explanatory variables except interest rate.

Legislative policy environment as facilitator of foreign residential investment in Australia

Significant changes to Australian foreign investment policy were enacted in December 2015 affecting how foreigners can purchase property. Therefore, it is timely to examine the role of legislative policy in supporting and shaping foreign investment in residential real estate. This paper contributes to the body of knowledge about the scale, extent and nature of foreign investment in residential real estate in several ways. First, legislative analysis reveals an emphasis on boosting new dwelling supply and on economic stimulus. Second, comparing Australian and international policies we show that some countries channel foreign ownership away from land and towards buildings only. Third, examining the scale of foreign investment in residential real estate since 2009 we show that while the number of foreign approvals has been rising, their value remained static. Fourth, our research reveals a changing investor profile over time in Australia. Additionally, on the Gold Coast, as in other capital cities in Australia, there has been a sectoral change with an increase in foreign property developers supplying dwelling product. The paper concludes with some key research recommendations to aid in understanding supply and demand from foreign residential property investors and the influence this has on property markets.

Chinese investors investment strategies in the Australian residential property market

Active participation by foreign investors in Australian residential property market is common subsequent to the Global Financial Crisis 2008. Many residential properties in the Australian capital cities were purchased by overseas buyers. An estimated 18% of new dwellings in Sydney and 14% in Melbourne were purchased by foreigners in 2014. Simultaneously, house prices rose by 6.0% in 2014 and 5.0% in 2015 in the Australian capital cities. The focus of this research is to uncover the emerging determinants for the Australian residential property market. Cross border semi-structured interviews were conducted in Shanghai (China), the first such undertaken in Australia. Some unique investment strategies of the private investors from China emphasised on non-capitalist factors, such as early education and residential tourism, were identified along with some insights on the Chinese government policies that have incentivised the cross border investments from China. It is believed that understanding these investment strategies will assist policy makers to effectively manage the overheated Australian residential property market without compromising the steady flow of Foreign Real Estate Investment.

Corruption and Home Bias in Global Real Estate Investments

This study affirms the negative relationship between corruption and real estate investment flows using a comprehensive set of cross-border commercial real estate investment data from 2001 to 2014. We find non-information explanations for foreign investments in corrupt countries. Foreign investments in corrupt markets are highly diversified by investor type and property type, and are independent of geographical proximity. Large foreign countries account for only a small fraction of foreign real estate investment in corrupt countries. Foreign investors form joint ventures to mitigate corruption risks. They hold real estate for a shorter period and earn lower returns in corrupt countries.

The Contribution of Foreign Real Estate Investment to Housing Price Growth in Australian Capital Cities

This paper models the effects of foreign investment in real estate on housing prices in Australia. We use a variety of panel data models that account for cross‐sectional heterogeneity across Australian cities and find that increases in investment are significant predictors of rises in the Australian Bureau of Statistics’ Residential Property Price Index. Our results are generally robust and suggest that increases in foreign investment account for between 20% and 30% of the rise in housing prices between 2004 and 2014 in Sydney and Melbourne. In other capital cities the effects appear to be negligible. Some policy implications of our findings are discussed.

Public perceptions of foreign and Chinese real estate investment: intercultural relations in Global Sydney

ABSTRACTMoving foreign human and financial capital through landed property is not a new phenomenon in Sydney. It is a recurring geopolitical strategy that is replete with intercultural tension and deep colonial roots. In contemporary Australia, there is an assumption in public policy and media rhetoric that there is a high level of public concern about foreign investment. However, there is little empirical data that examines public perceptions. In this study, we are interested in whether the dominant voices in this debate represent broad public views about this issue. We sought to fill this gap by conducting a survey of almost 900 Sydney residents, looking at their perceptions of foreign and Chinese investment. We find high levels of public concern and discontent about foreign investment amongst Sydneysiders, with Chinese investors being a key target of this discontent. In the context of high housing prices in Sydney, there were widely held concerns about housing affordability. Survey respondents had a sophisticated understanding of what influences house prices, but with an overemphasis on the role of foreign investment. There is a general lack of support for policy that encourages foreign investment, and a lack of confidence in how the government is regulating foreign investment. Half of our participants reported that they would not welcome Chinese foreign investment in their suburb.

The Impact of Foreign Real Estate Investment on Land Prices: Evidence from Mauritius

AbstractThis paper examines the impact of foreign real estate on land prices in Mauritius. Using a panel dataset comprising price, quantity and other information for a variety of luxury villas and apartments, we show that the price of land paid by locals has been pushed up by a modest 4–22% in total as a result of these developments. We also examine the determinants of the prices of the dwellings in these schemes, finding that they are strongly related to the sizes of the plots, whether they have ocean views, and the desirability of the region in which they are sited, although there remains considerable unexplained heterogeneity.

The globalisation of real estate: the politics and practice of foreign real estate investment

Foreign investment in residential real estate – especially by new middle-class and super-rich investors – is re-emerging as a key political issue in academic, policy and public debates. On the one hand, global real estate has become an asset class for foreign individual and institutional investors seeking to diversify their investment portfolios. On the other, a suite of intergenerational migration and education plans may also be motivating foreign investors. Government and public responses to the latest manifestation of global real estate investment have taken different forms. These range from pro-foreign investment, primarily justified on geopolitical economic grounds, to anti-foreign investment for reasons such as mitigating public dissent and protecting the local housing market. Within this changing global context, the six articles in this special issue on the globalisation of real estate present a diverse range of empirical case studies from Canada, Hong Kong, Singapore, Russia, Australia and Korea. This editorial highlights four methodological challenges that the articles collectively highlight; they are (1) investor cohorts and property types, (2) regulatory settings, (3) geopolitics and (4) spatial differences and temporal trajectories.

The (geo)politics of land and foreign real estate investment in China: the case of Hong Kong FDI

Market reforms and the relaxation of rules governing inbound investment have contributed to the growth of foreign investment in Chinese real estate. Although the property sector remains one of the most tightly regulated, property developers from Greater China have enjoyed relative success in the mainland market. Conventional explanations of such investment outcomes have often drawn attention to economic complementaries and cultural proximities. By tracing the development of Hong Kong investment in China's real estate from the late 1970s to the present, this paper demonstrates the importance of considering (geo)politics at both the national and ground levels in analysing bilateral economic relations. The geopolitical prerogatives of national sovereignty structure economic interactions between the Chinese state and the Special Administrative Region, while popular politics from the ground level up interacts with state-level geopolitics to affect and change policy outcomes. The shifting dynamics demonstrate that the cultural meaning and value of foreign capital are not static or fixed but rather open to continuous re-negotiation and contestation.

Examining why developers encourage foreign investment in local residential real estate in India

PurposeThe study aims to explore the role of non-resident Indian (NRI) investors into staggering local housing market and the efforts of developers and regulators to lure such investors.Design/methodology/approachPrimary data for this exploratory study were assembled through a Google form-based questionnaire circulated over internet among NRIs residing in Kingdom of Saudi Arabia, USA, Singapore and United Arab Emirates, whereas the secondary data sources include the Government of India policy documents, World Bank data, Reserve Bank of India archives and reports published in reputed financial and others print media sources.FindingsIndian housing market is confronted with a demand and supply mismatch at present. While a massive demand lingers at affordable housing segment, on the contrary, millions of housing inventories are also piling up. Consequently, property developers are attempting to lure the large population of NRIs residing at global cities. Study observes that sentimental attachment to the homeland, higher rate of returns, anticipated rental incomes are the major decisive elements. Additionally, growth in infrastructure, world-class amenities offered by developers, conformity to sustainability and political stability is the other critical reasons.Research limitations/implicationsOn first hand, the study outlines a novel kind of foreign investment in Indian local residential real estate that is via NRI channel. Second, non-resident investors might surprise to the property developers and government through a realistic strategic approach.Originality/valueProbably, the study is first of its type gazing at NRI investors, as a foreign investor, in the local residential real estate.

Transnational real estate in Australia: new Chinese diaspora, media representation and urban transformation in Sydney's Chinatown

Foreign real estate investment, especially from Asia, is growing rapidly in many global cities. Whilst transnational real estate has recently been highlighted in various media coverage, its actual process is still relatively under researched by housing scholars. This paper fills this research gap by framing transnational real estate in the broader context of intensified globalisation and increased transnational mobility of people, capital and information and by grounding it within the case study of Sydney's Chinatown in Australia which focuses on three dimensions of the process, namely the role of Chinese diaspora in shaping transnational real estate practices, the locality characteristics of Chinatown which contribute to Chinese capital accumulation and urban transformation in the area, and the manner in which transnational real estate investment practices have been reshaped, due to misrepresentation of the issue in public media. Based on in-depth interviews, content analysis of newspapers and analysis of official statistics, this paper demonstrates the global–local nexus of transnational real estate process in Australia which is constituted, and shaped, by various global forces and local factors, including social actors’ motives and practices, geographical settings and cultural politics.

Does Real Estate Defy Gravity? An Analysis of Foreign Real Estate Investment Flows

AbstractThis paper investigates the scale and determinants of foreign investment flows between national real estate markets. Using data for over 100 countries over 2007–2012, the results indicate that, consistent with previous studies for trade, foreign direct and portfolio investment variables such as size and distance have significant effects on foreign real estate investment flows. Large positive size effects are consistent with a combination of scale economies and information externalities producing investment concentration across markets and in conjunction with direct and indirect transaction costs specific to real estate markets. Physical distance coefficients are relatively small compared to the studies of FDI.

Foreign Investment in Real Estate and Housing Affordability

Foreign Investment in Real Estate (FIRE) is gradually becoming an important source of capital to many emerging markets in the world. In one hand, FIRE helps to improve the performance of real estate sector and subsequently upgrade the level of income of host countries. However, on the other hand, the inflows of FIRE may have the effect of increasing the house price. Hence, this study attempts to fill up the under-researched area of pressing issue surrounding the implications of FIRE inflows on host country’s affordability level by focusing on the experience of emerging real estate markets. The approach is specifically designed to be as informative as possible in offering the benefits and costs of luring FIRE into the host countries with respect to house affordability. Generally, this study found that FIRE is beneficial in increasing national income but might be offset by increasing house price.

Does Foreign Investment Affect U.S. Office Real Estate Prices?

This article examines the impact of foreign real estate investment on U.S. office market capitalization rates. The geographic unit of analysis is MSA and the time period is 2001–2013. Drawing upon a database of commercial real estate transactions, the authors model the determinants of market capitalization rates with a particular focus on the significance of the proportion of market transactions involving foreign investors. Employing several econometric techniques to analyze the data, the results suggest statistically significant effects of foreign investment across 38 U.S. metro areas. It is estimated that, all else equal, a 100 basis point increase in foreign share of total investment in a U.S. metropolitan office market causes about an 8 basis point decrease in the market cap rate.