Real Estate Investment Research Articles

Exploring Economic Factors to Enhance the Performance of Real Estate Investment Trusts in the Eastern European Region

ABSTRACT This study explores the economic determinants that can improve the performance of real estate investment trusts (REITs) in Eastern European economies. Employing a cross-sectional autoregressive distributed lag (CS-ARDL) approach, the findings show that an improvement in dividend yield, net income, stock return, exchange rates, and size can improve the performance of REITs. However, leverage and interest rates adversely affect the performance of REITs. The study spotlights the crucial role standardized regulation can play in mitigating fragmentation in the real estate market, being capable of streamlining capital allocation and hence, offering notable advantages to REITs in smaller Eastern European states.

ESG dynamics in real estate: temporal patterns and financial implications for REITs returns

PurposeThis paper aims to explore the dynamic relationship between ESG scores and REITS returns. The overarching goal is to provide a better understanding of how ESG considerations impact financial performance across different temporal contexts.Design/methodology/approachUsing a sample of 175 European Equity REITs, this analysis combines numerical ESG scores with the Fama-French model, employing both random and fixed effects methods. It integrates individual REIT data and the HESGL (High ESG Scores Minus Low ESG Scores) factors to assess their impact on REIT returns.FindingsThe findings highlight divergent patterns between the numerical ESG score and the HESGL factor concerning REIT returns. While the numerical ESG score displays a negative impact in later periods, the HESGL factor demonstrates a positive effect during prosperous times but loses significance during crises.Originality/valueThis research contributes original insights by emphasizing the importance of temporal segmentation in understanding the nuanced and evolving nature of the relationship between ESG scores and REITs’ returns. The study provides a comprehensive analysis and highlights divergent outcomes that are essential for a better interpretation of ESG impacts on real estate investments.

Analyzing the Performance of Real Estate Investment Trusts and the Impact of COVID-19

Analyzing the Performance of Real Estate Investment Trusts and the Impact of COVID-19

"Analyzing Infrastructure REITs in China: Development, Regulations, and Financial Innovation"

Infrastructure Real Estate Investment Trusts (REITs) in China have become a vital investment tool, reflecting the country's fast-growing infrastructure sector. Since the first batch of 9 public infrastructure REITs in 2021, the market has expanded to 29 REITs, valued at nearly RMB 1,000 billion. Supported by the government, REITs in China offer investors a chance to engage in real estate without owning physical properties, providing opportunities to diversify risks and achieve market liquidity. This paper analyzes the development, market dynamics, regulation, and financial innovation of REITs in China, offering insights for various stakeholders. It emphasizes REITs' potential in China's economic growth and suggests strategies for sustainable development in the infrastructure sector. This paper conducts an analysis of the development, market dynamics, regulation, operating structures, and financial innovation of REITs in China. By examining the global acceptance and influence of REITs, the paper suggests strategies for China to harness this investment tool for sustained development in the infrastructure sector.

Understanding the local government debt in China

The alarmingly high level of local government debt (LGD) in China threatens the financial stability, fiscal system, and sustainability of China's economic success. This study provides a comprehensive and in-depth understanding of the evolution and causes of LGD expansion by investigating institutional details, developing conceptual frameworks through economic and institutional lenses, and conducting empirical analyses. Under the economic framework, we find that the demand-side (issuing LGD to fill the widening fiscal deficits) driver explains little about the rapid expansion of LGD in China except in the Northeastern region, while the supply-side driver (banks' and the public's asset needs) and investments in real estate and local employment are positively associated with LGD. Under the institutional framework, rent-seeking behaviors (capitalizing on executive power and institutional frictions), instead of resolving institutional frictions (connecting agents of different political and economic natures to achieve state goals through market mechanisms) is a significant determinant of LGD. These findings suggest that anti-corruption and system design (or supervision and incentives) in addressing the boundary between local government officials and businesses is critical for financial stability and economic sustainability in China.

Quantile-based extended joint connectedness between trade policy uncertainty and Gulf Cooperation Council Islamic sectoral volatility

This study quantifies the shock transmission mechanism between the trade policy uncertainty (TPU) index and Sharia-compliant stock sectoral conditional volatility in the Gulf Cooperation Council (GCC) countries. We employ a comprehensive analysis that includes the time-domain extended joint and frequency-domain quantum vector autoregressive (QVAR) frameworks. The time-domain QVAR demonstrates that TPU causes the most substantial shocks to utility sector volatility. Investors in the GCC must strategically allocate their investment portfolios to the consumer services and energy industries, which are less vulnerable to the TPU shock. The results show that TPU shocks provide more error variances to the long-term and bullish conditional volatility (or higher quantiles) of the utility, real estate investment trust funds (REIT), healthcare, and industry sectors. Conversely, during bearish volatility conditions (lower quantiles), TPU shocks result in higher shocks in the conditional volatility of the utility, REIT, finance, and industrial sectors. Long-term investors should diversify their portfolios to mitigate risk in the utility, REIT, and industry sectors through strategic investments in consumer service sector. However, in the short term and during both bearish and bullish sectoral volatility, the consumer service and industry sectors are more vulnerable to TPU shocks. Regarding diversity, the REIT, energy, and financial sectors are the least affected by TPU shocks, offering a protective buffer in the short term and during periods of higher and lower GCC Islamic sectoral volatility.

A Study on the Impact of MacroEconomic Indicators in Vietnam on Real Estate Investment

A Study on the Impact of MacroEconomic Indicators in Vietnam on Real Estate Investment

Changing Social Movements in Lisbon? Housing Financialisation and Post-pandemic Activism

During the last decade, following years of austerity and rapid growth driven by tourism, real estate, and external investment, Lisbon has become a paradigmatic case of the financialisation/crisis nexus in the housing field. The simultaneous emergence and growth of social movements for the right to housing has been widely documented, with some accounts focusing on anti-financialisation struggles. In this article, we present the repertoires and claims of four activist groups and platforms born between 2022 and 2023 and discuss how Portuguese social movements are contending with the increasing centrality of financialisation in housing. In sum, we present three broad patterns of rescaling – intersectionality, internationalisation, and relations with political parties – in relation to the general endeavour to build a mass movement.

A Study on the Forecasting of Real Estate Market Using Algorithms

Technology using algorithms has an impact on various aspects of the real estate market, such as real estate market price prediction, investment recommendation, and rent setting. First, it was confirmed that by improving the accuracy of real estate price prediction, real estate market price prediction using AI algorithm can derive more accurate results through machine learning and deep learning technologies based on past data. In addition, it is the development of an investment recommendation system. The investment recommendation system using AI can promote efficient fund management by discovering promising investment opportunities in the real estate market and proposing them to investors. The next is the optimization of lease on a deposit basis, monthly rent, and rent setting. The rent setting model using AI technology can set the rent appropriately through negotiations between real estate owners and tenants in consideration of market trends, demand, and predictions by region. Finally, it is the automation and efficiency of the real estate transaction process system. Smart contracts and automation systems using AI can save money and time between transaction parties by simplifying and streamlining the real estate transaction process. However, problems with data security and privacy protection are emerging as new challenges. New security and privacy problems arise in dealing with personal information, transactions, and data, and appropriate responses to them are urgent.

CRITICAL REVIEW ON INSTITUTIONAL REAL ESTATE INVESTMENT DECISION-MAKING MODELS

This critical review delves into the underexplored realm of institutional real estate investment decision-making, a domain that holds paramount significance in the financial landscape. Despite the extensive scrutiny of individual real estate investors' decision-making processes, there exists a noticeable lack of research on the pivotal role played by institutional investors. As the primary stakeholders armed with substantial financial resources, institutional investors, encompassing entities such as investment funds, insurance companies, and pension funds, wield unparalleled influence in the market. This paper aims to unravel the complex decision-making models employed by institutional investors, focusing on the period from 2000 to 2024. Employing the PRISMA model, the review meticulously incorporates 21 pertinent articles, and a comprehensive thematic analysis, facilitated by ATLAS.ti version 23.2.1, reveals three prominent decision-making models – the Normative Model, the Descriptive Model, and the Prescriptive Model. In dissecting the factors that shape institutional real estate investment, the study identifies four key influencers: political, economic, legal, and real estate market fundamentals. The intricate interplay of these factors forms the crux of decision-making strategies adopted by institutional investors, as they diligently safeguard the interests of their trustees. Moreover, a noteworthy revelation surfaces regarding the geographical bias in existing research, with a scarcity of studies in developing countries, notably in Malaysia. This observation not only underscores the need for more comprehensive exploration in these regions but also presents a compelling avenue for future research endeavors. This critical review not only contributes to the ongoing discourse but also paves the way for a more nuanced understanding of the dynamic landscape of institutional real estate investment decision-making.

Housing Financialization and Community Wellbeing: Tenant Resistance in the Liveable City

Tenant movements are increasingly impacting urban governance and the development of housing in Canadian cities. Tenants resisting violent and ‘gentler’ forms of gentrification—through outright expulsion or being priced out of their communities—have demonstrated their unwillingness to allow financialized real estate to determine their housing futures. At the same time, tenants also have to contend with discourses of urban improvement that increasingly dominate the terrain of financialized rental housing (re)development. Community benefits agreements and other similar arrangements emphasizing neighbourhood liveability and wellbeing are increasingly deployed as devices to justify housing (re)development, but also work to facilitate gentrification. Through an examination of a struggle between tenants and a financialized real estate investment firm in Canada’s capital city Ottawa—which aspires to be North America’s most liveable mid-sized city—this article explores the implications of a Community Wellbeing Framework for a neighbourhood redevelopment project forged through tenant resistance efforts.

Boardroom dynamics: the impact of board gender diversity on discretionary dividend policy in US REITs

Purpose This study aims to address a notable gap in the existing literature by exploring the relationship between gender diversity and dividend policy within the context of US Real Estate Investment Trusts (REITs). Design/methodology/approach The authors use a substantial data set comprising 1,398 firm-year observations across 209 US REIT companies from 2011 to 2021 to address the research aims. Fixed effects models and generalized least squares regression methods are used in the analysis. Findings The results demonstrate a significant positive association between board gender diversity and higher dividend payouts among US REITs. This relationship holds after controlling for corporate governance and other firm-level factors. The findings have strong implications that the presence of women on REIT boards contributes to a greater propensity for discretionary dividend increases in the USA. Originality/value This research contributes to the literature by empirically examining female directors’ role in influencing US REITs’ dividend policies, an area lacking adequate prior scholarship. The paper also considers the unique regulatory environment of REITs, highlighting the importance of the study for externally financed firms.

CLIMATE‐JUST HOUSING: A Socio‐spatial Perspective on Climate Policy and Housing

AbstractFocusing on the nexus of climate and housing policy, this article analyzes the socio‐spatial consequences of urban climate mitigation policies and the resultant need to broaden the concept of climate justice. By using the example of energy retrofitting in a low‐income district in Kiel, Germany, the article examines cities’ dependence on real estate companies to reach low‐carbon goals in a privatized housing market and the (potential) need to provide incentives for investment. As the case study shows, this can lead to a highly sensitive confluence of climate policy, private real estate investment and neighborhood development policy, which leads to a higher financial burden as well as the potential displacement and further political marginalization of current tenants. In light of these results, the article argues for the application of a climate justice frame in analyses of urban climate policies that integrates housing justice with spatial justice. Specifically, it calls for the right to climate‐just housing; that is, for the right to affordable housing to be connected with the right to energy‐efficient housing in one's own neighborhood. This implies the right to information and to urban space as political space, which in turn means the politicization of the targets, strategies and, not least, spaces of urban climate policy.

PANDEMIC’S IMPACT ON BURSA MALAYSIA SECTORS: A COMPREHENSIVE STUDY UTILIZING OLSM AND ESM

The pandemic has the potential to induce significant stock market volatility as a consequence of investor decisions, while movement restrictions may force the closure of many small-to-medium enterprises (SMEs). Despite this, there is a noticeable absence of comprehensive perspectives on the pandemic's impact across all sectors in Bursa Malaysia. Consequently, this paper endeavors to scrutinize the sector within Bursa Malaysia most profoundly affected by Covid-19. Employing the Ordinary Least Squares method (OLSM) method and the Event Study Method (ESM), the study compares stock returns and risks. The independent variables encompass daily counts of Covid-19 cases and deaths in three countries—Malaysia, the United States, and China—as well as the Brent oil price. The study focuses on 13 sectorial indices, including construction, consumer products, energy, finance, healthcare, industrial products, plantations, property, real estate investment trusts, technology, telecommunications and media, transportation and logistics, and utilities. Utilizing the ESM, the study investigates the daily average return, abnormal return, and expected return of each sector to gauge the impact of Covid-19. Historical data from March 18 to May 3 over three years (2019 to 2021) is employed. Results indicate that an increase in Covid-19 cases in Malaysia correlates with a decrease in the performance of these 13 sectors. Consequently, this study contributes to enhancing investor comprehension of sectorial indices' volatility and significance during the pandemic, aiding them in monitoring sectoral performance in the securities market.

Sustainable withdrawal strategies for Brazilian REITs portfolios

This work compares sustainable cash withdrawal strategies for Brazilian REITs (Real Estate Investment Trusts) portfolios. It is assumed that cash withdrawals must be maintained for an indefinite period of time, while the capital invested in the REITs portfolio is adjusted for inflation. For simplicity, the capital is assumed to be invested in equal proportions in the REITs of the portfolio. The REITs market is relatively new in Brazil, and this study illustrates the performance of three strategies generating sustainable and steady cash flows for the investor based on a sample of Brazilian REITs. These REITs have publicly available data and have been operating continuously over the past 10 years. The findings of the study reveal that sustainable cash withdrawal rates are feasible for Brazilian REITs portfolios, however, a significant variability of cash withdrawal rates takes place among the individual portfolio REITs. The experimental results obtained for an equal-weight Brazilian REITs portfolio suggest that the three strategies investigated potentially can provide total annual returns that vary between 3.32\% and 3.38\% above the annual inflation and are sustainable during the period analyzed. This study also suggests that sustainable withdrawal for REITs portfolios is related to the cash flow risk faced by the individual REITs in the portfolio.

At‐the‐market equity offerings and cash flow shortfalls: Evidence from real estate investment trusts

AbstractThis article examines how access to at‐the‐market (ATM) equity offering programs can help mitigate the adverse effect of temporary cash flow shortfalls on firm performance. Using asset‐level exposure to the spread of COVID‐19 as a proxy for a REIT's sensitivity to a future operational cash flow shock, we find that ATM program access reduces the magnitude of the negative performance effect by nearly 70%. We extend our analysis outside of the pandemic period to provide further evidence of the broader importance of ATM program access as an important source of financial flexibility during more general periods of cash flow uncertainty.

REIT Growth, Valuation and Performance

The extent to which a real estate investment trust’s (REIT’s) physical growth is related to market valuation and performance is examined. Using a sample of U.S. equity REITs over the 1995–2020 period, we measure a REIT’s growth as the growth of its total area in square feet (or, alternatively, its number of properties) and find that fast-growing REITs, while able to increase cash flows, are unable to increase such cash flows with equal proportionality with the expansion of their physical footprint. In essence, the growth in cash flow while positive is lower than the growth in square feet or number of properties. Moreover, we find no evidence that growth alone is associated with stock performance. However, we show that rapidly growing REITs are associated with higher market valuation, measured by capitalization rates, Price/FFO ratio, and firm Q. These findings suggest that capital structure, managerial actions and potential for improved property level performance associated with scale rather than physical growth alone play major roles in REIT valuation. Overall, our findings are aligned with expectations for market efficiency in a highly transparent asset group such as equity REITs.

Risk Assessment of Highway Infrastructure REITs Projects Based on the DEMATEL—ISM Approach

Highway infrastructure projects financed by real estate investment trusts (REITs) have garnered significant attention due to their potential for generating stable returns. However, assessing the risks associated with such projects remains a critical challenge. This study addresses this gap by proposing a novel approach to risk assessments utilizing the Decision-Making Trial and Evaluation Laboratory (DEMATEL) integrated with Interpretive Structural Modeling (ISM). Unlike traditional risk assessment methods, which often treat risk factors as isolated entities, the DEMATEL—ISM approach provides a comprehensive framework that reveals the direct and indirect relationships between risk factors, thus offering a systemic understanding of the interactions. The results found that falling market prices, insufficient operating revenues, and operational inefficiencies were direct influences, and high financing costs and force majeure were the fundamental influences, while other factors acted as intermediate influences. In addition, the study identifies direct and indirect relationships between different risk factors, providing a hierarchical topology of risk factors to reflect the relationships between the risk factors. The findings not only contribute to enhancing the understanding of risk dynamics in highway infrastructure REITs projects, but also offer a structured framework for risk assessment and mitigation. This research represents a significant innovation in the field of infrastructure investment risk management, offering practical implications for project planning, decision-making, and risk management strategies.

A comparative analysis of “building well-being” factors for prime office workers in London and Hong Kong

PurposeIn order to determine whether the factors affecting office worker well-being are location dependent, this exploratory study analyses the relative importance of different “building well-being” factors for prime office workers in two leading but environmentally contrastive real estate markets: London and Hong Kong.Design/methodology/approachThis paper adopts a mixed methods sequential explanatory design (follow-up explanations model), consisting of three phases: an exploratory phase to refine the building well-being factors, a quantitative phase utilising a questionnaire to assess the relative importance of these building well-being factors (N = 281: London = 171; Hong Kong = 110), followed by a final phase of follow-up interviews with respondents to explore the reasons behind the significant differences observed in the quantitative phase (N = 13: London = 7; Hong Kong = 6).FindingsWhile London and Hong Kong share some highly-ranking factors in common, significant differences in importance are observed for 17 of the 31 identified factors as a result of contrasting physical, economic, and cultural environments.Originality/valueDespite growing recognition of the importance of the built environment on well-being, to the authors’ knowledge there has been no previous research investigating how building well-being demands may vary systematically across geographies. Understanding these differences has important implications for interpreting building well-being research, effective business operations, real estate investment, building certification scheme design, and governance of the built environment.

Navigating the Nexus of Urbanization, Technology, and Global Economics in Real Estate Market Dynamics

This article provides a comprehensive analysis of the key factors shaping real estate markets, focusing on urbanization trends, technological advancements, and global economic shifts. Urban migration is fueling demand in metropolitan areas, leading to significant infrastructural developments and a reevaluation of property values. Concurrently, technological innovations like artificial intelligence, virtual reality, and blockchain are transforming real estate transactions and management, enhancing market efficiency and transparency. Additionally, the paper examines the impact of global economic conditions, including trade wars and policy changes, on real estate investment and market stability. By integrating these elements, the article forecasts potential market trends and offers strategic insights for navigating the complexities of the real estate sector. This synthesis not only highlights current influences but also projects future changes in the landscape of real estate, suggesting adaptive strategies for industry stakeholders.