Foreign Real Estate Research Articles

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.

Transnational Corruption and the Globalized Individual

We present a new, more transnational, networked perspective on corruption. It is premised on the importance of professional intermediaries who constitute networks facilitating cross-border illicit finance, the blurring of legal and illegal capital flows, and the globalization of the individual via multiple claims of residence and citizenship. This perspective contrasts with notions of corruption as epitomized by direct, unmediated transfers between bribe-givers and bribe-takers, disproportionately a problem of the developing world, and as bounded within national units. We argue that the professionals in major financial centers serve to lower the transaction costs of transnational corruption by senior foreign officials. Wealthy, politically powerful individuals on the margins of the law are increasingly globalized as they secure financial access, physical residence, and citizenship rights in major OECD countries. These trends are evidenced by an analysis of the main components of the relevant transnational networks: banks, shell companies, foreign real estate, and investor citizenship programs, based on extensive interviews with key informants across multiple sites.

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.

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.

(Foreign Real Estate Tax Experience and its Applicability to Differentiate Tax Rates in Russia)

Russian Abstract: Работа посвящена анализу системы налогообложения зарубежных стран с целью выработки дифференцированных подходов и ставок в области налогообложения объектов недвижимости в России.В России начинает формироваться налогообложение на имущество граждан. Первые результаты реформы налогообложения можно будет подвести в конце 2016 года - начале 2017 года. Так как реформа будет введена повсеместно с 2016 года, исследование зарубежного опыта налогообложения является одной из самых актуальных задач.Исследование налогообложения в зарубежных странах проводилось с использованием как экспертного метода, так и на основе изучения имеющихся в международной информационной системе данных.English Abstract: The work is devoted to analysis of foreign countries the taxation system in order to develop differentiated approaches and rates of taxation of real estate in Russia.In Russia, begins to form on the taxation of property of citizens. The first results of the tax reform will be possible to bring in the end of 2016 - early 2017. Since the reform will be introduced throughout 2016, study foreign experience of taxation is one of the most urgent tasks.Tax Investigation in foreign countries was carried out using both the expert method, and based on the study of existing international information system data.

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.

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.

Determinants of Foreign Versus Domestic Real Estate Investment: Property Level Evidence from Listed Real Estate Investment Firms

We examine the determinants of foreign real estate investment relative to the domestic case using the portfolios of a large sample of publicly traded real estate investment companies; where foreign investment is defined as the property owner headquarters being located in a different country than a given asset. The cross-sectional results provide strong evidence that real estate firms are more likely to take a smaller stake in larger assets when investing abroad. The penchant for large assets holds when controlling for economic activity, real estate investment opportunities, depth and sophistication of the capital markets, investor protection and the legal framework, administrative burdens and regulatory limitations, and the socio-cultural and political environment at both the property nation and headquarter nation levels. In general, foreign ownership is less likely with industrial, office, retail, and self-storage properties. Capital market development is consistently negatively related to foreign investment.

Determinants of Foreign versus Domestic Real Estate Investment: Property Level Evidence from Listed Real Estate Investment Firms

Determinants of Foreign versus Domestic Real Estate Investment: Property Level Evidence from Listed Real Estate Investment Firms

Зарубежные инвестиции россиян со вторым гражданством или иностранным видом на жительство

The article considers the main features of foreign investments of the Russians who have dual citizenship and/or foreign residence permit. The main task is to find out the reasons for obtaining the second passport by the businessmen and the representatives of the Russian middle-class. The author points that the majority of the businessmen has the largest part of their assets in Russia. Also, their assets may be registered in offshore jurisdictions other than the countries of the second citizenship. As for the countries of dual citizenship, there are usually second-rate assets’ allocations of two categories: (1) required for citizenship-by-investment programs and (2) invested into the real estate or ready made business (for example, into the leading hi-tech companies supplying their products to the Russian Federation). Therefore, business reasons cannot be considered as the principal motivation for acquiring the second citizenship. The more specific reasons may differ. Firstly, many Russian businessmen moved abroad during 1990s in order to avoid the political turbulence. Secondly, some businessmen used their original foreign citizenship for developing business in Russia. Generally, foreign citizenship has been regarded by all businessmen as a certain precaution from the pressures from the local law enforcement bodies and as a driver of business contacts due to visa-free travelling. The article also covers the foreign investment activities of those ordinary Russian citizens who buy real estate in foreign countries in order to acquire a residence permit. An analysis of the available data of foreign real estate agencies and migration services is undertaken. It is concluded that most of middle-class Russians buy real estate abroad not with aim to emigrate from Russia but to acquire a place for spending vacations and, to a lesser extent, to live after retirement. Acknowledgments. The article has been suppoted by a grant of the Russian Science Foundation (project № 14-28-00097 “The optimization of Russian foreign investment ties in the context of deteriorating relations with the EU”).

Determinates of Foreign Real Estate Investment within Thailand’s Special Autonomous Systems (SAS) of Bangkok and Pattaya City

Determinates of Foreign Real Estate Investment within Thailand’s Special Autonomous Systems (SAS) of Bangkok and Pattaya City

DOES REAL ESTATE TRANSPARENCY MATTER FOR FOREIGN REAL ESTATE INVESTMENTS?

The purpose of this paper is to examine the impact of real estate transparency (RET) on foreign real estate investments (FREI). Most of the previous studies have argued that the free flow of information and the fair and consistent application of local property laws could attract greater amounts of FREI. Using observations from 32 countries covering 2004, 2006, 2008 and 2010 and applying fixed-effect and the generalized method of moments (GMM) techniques, our empirical results reveal that RET is not a major determinant of FREI. However, we find that the effect of RET on FREI is dependent on its interaction with the level of income implying that the higher the level of income in the host country, the higher the effect of RET on FREI. Finally, the results show that foreign direct investment (FDI) in other sector, market size and property prices are important determinants of FREI.

Real Estate Abroad: How to Make the Right Choice

Last years more and more Russians are buying property abroad, not only in order to obtain from her rental income or resale, but also for a family holiday by the sea in a favorite of the country. The article describes the main criteria for the choosing of foreign real estate. Particular attention is paid to the specifics of buying property in countries such as Turkey, Egypt, Greece.

Foreign Real Estate Holdings in Thailand’s Special Autonomous Systems (SAS) Bangkok and Pattaya: A Structural Equation Model

Foreign Real Estate Holdings in Thailand’s Special Autonomous Systems (SAS) Bangkok and Pattaya: A Structural Equation Model

Foreign direct investment in China's real estate market

This paper analyzes the recent trend of foreign direct investment in China's real estate market (FDIRE). It develops a panel regression model to examine the determinants of FDIRE in China. It incorporates a new explanatory variable to test the difference between FDIRE in coastal areas of China and in other areas. Such variable was never incorporated in models of previous studies. The result reveals that GDP per capita and the number of foreign real estate enterprises are the most significant factors affecting foreign investment in China's real estate market. This reflects that China's economic growth and its increasingly open market have a significant contribution to the rising trend in foreign investment in its real estate market. The newly incorporated regional factor COASTAL in the panel regression model shows that FDIRE in China still concentrates in coastal areas. However, there is more investment in those fast growing areas in recent years. It is suspected that FDIRE may overheat China's real estate market. Thus the Chinese government should monitor the real estate market carefully to stabilize the house price.