Real Estate Performance Research Articles

Blockchain adoption impact on real estate performance: the mediating role of real estate and blockchain transparency

PurposeThis study investigates the factors that lead to the adoption of blockchain technology through payment transactions and how this not only affects real estate (RE) and blockchain transparency but also RE performance.Design/methodology/approachData gathered across RE firms in the United Arab Emirates (UAE) were employed to test the model. The measurement model and structural equation modeling (SEM) were used to test the items and the hypotheses illustrated in the proposed model.FindingsPerceived financial benefits, competitive pressure and top manager support were demonstrated to successfully influence blockchain adoption (BA). Despite blockchain’s early stages of development, its impact on RE operations cannot be ignored and should be more objectively examined in order to gain a better understanding of it. UAE blockchain-based companies could be seen as having a competitive advantage that maximizes resource consumption.Originality/valueThis study introduces the positive influence of blockchain technology on RE payment transactions and may advance information on how blockchain technology has the potential to change the RE sector. The paper finds its significance in exploring how RE payment systems must change to remain competitive in the market amid emerging digitalization trends.

Moderating role of Financial Literacy on the Relationship between Behavioural Biases and Real Estate Investment Performance in Kenya

In contemporary finance matters, financial literacy has been dubbed a key component of investment performance. This study sought to explore the theoretical perspective of financial literacy and its impact on real estate performance in Kenya. The study was guided by heuristics theory, prospect theory, herding theory and investment market theory. The study results indicate that financial literacy moderates the relationship between behavioural biases and performance of real estate industry in Kenya. Based on these findings, the study recommends that when evaluating investments, investors should avoid at barely looking at the risk and return characteristics of that individual investment but also consider the role and impact of financial literacy on investment performance

Unveiling the impact of SFDR on unlisted real estate funds: a J-Curve and panel regression analysis

PurposeThis paper investigates the relationship between the sustainable finance disclosure regulation (SFDR) and the performance of unlisted real estate funds.Design/methodology/approachWhile existing literature has primarily focused on the impact of voluntary sustainability disclosure, such as certifications or reporting standards, this study addresses a significant research gap by constructing and analyzing the financial J-Curve of 40 funds under the SFDR. The authors employ a panel regression analysis to examine the effects of different SFDR categories on fund performance.FindingsThe findings reveal that funds categorized under Article 8 of the SFDR do not exhibit significantly poorer performance compared to funds categorized under Article 6 during the initial phase after launch. On average, Article 8 funds even demonstrate positive returns earlier than their peers. However, the panel regression analysis suggests that Article 8 funds slightly underperform when compared to Article 6 funds over time.Practical implicationsWhile investors may not anticipate lower initial returns when opting for higher SFDR categories, they should nevertheless be aware of the limitations inherent in the existing SFDR labeling system within the unlisted real estate sector.Originality/valueTo the best of our knowledge, this study represents the first quantitative examination of unlisted real estate fund performance under the SFDR. By providing unique insights into the J-Curves of funds, our research contributes to the existing body of knowledge on the impact of sustainability regulations in the financial sector.

3자간 등기명의신탁에서 명의수탁자의 임의처분 시 매도인의 귀책사유 존부와 부당이득반환청구권의 귀속주체 - 대법원 2021. 9. 9. 선고 2018다284233 전원합의체 판결 -

The Korean Supreme Court issued an en banc decision 2018Da284233. The issue is who can claim a right to unjust enrichment in a case where the title trustee disposed of the title trust immovable in the title trust involving a third party. The majority opinion held that the title trustor can claim a right to unjust enrichment, whereas the dissenting opinion held that the seller can claim. The majority of published commentaries on this judgment are against the majority opinion of the judgment in question, and in favor of the dissenting opinion. However, as with the majority opinion, the view that the trustee can seek the return of unjust enrichment is reasonable. The reason for this is as follows. First, it is because the seller cannot be held responsible for the impossibility of performance of the trust real estate. In order for the seller to be held accountable, circumstances must be recognized that the seller may have cooperated illegally, such as transferring the registration despite knowing the title trust. However, as an average person, the seller cannot distinguish title trust from similar but legally permissible concepts such as interim registration. Therefore, even if the seller directly transferred the registration to the title trustee, it cannot be seen that he cooperated while knowing the facts of the title trust, so the cause cannot be recognized. Therefore, the title trustee cannot hold the seller liable for default, and as a remedy for the title trustee, it is reasonable to acknowledge the claim for return of unjust enrichment against the title trustee. Furthermore, since the title trustee's position to occupy, use, and profit from the entrusted real estate is not separable from the buyer's position in the sales contract, the title trustee concurrently serves as an unregistered buyer who takes delivery of the object of sale and uses and profits from it. The status of an unregistered buyer includes the right to use and profit as well as the right to legally dispose of and transfer, and is much stronger than a claim for simple possession. Therefore, an unregistered purchaser cannot be seen as a simple creditor, and it is appropriate for a title trustor who concurrently holds the status of an unregistered purchaser to recognize independent allocated profits. Therefore, the majority opinion is valid.

Green investments, green returns: exploring the link between ESG factors and financial performance in real estate

PurposeThe aim of this research paper is to analyze the connection between ESG performance and financial performance within the real estate sector. By focusing on ESG ratings and pillar scores as proxies for ESG performance, the study investigates how these factors impact both profitability and market indicators.Design/methodology/approachWith data sourced from over 680 publicly listed real estate companies, the research employs a fixed effects regression model to analyze the findings. By utilizing this method, the study can assess the impact of governance, environmental and social factors on both the accounting and market performance of real estate companies.FindingsThe outcomes of this study underscore a link between sustainability, particularly environmental aspects and financial performance. However, the study also reveals a contrasting result: governance factors are associated with adverse financial outcomes. Nevertheless, it is important to highlight the limitations as the results present a mixed picture with limited significant findings.Practical implicationsCompanies should prioritize improvements in environment to boost profitability, while they should carefully consider the costs and benefits associated with enhancing their governance structure.Originality/valueBy focusing on this industry and adopting a global perspective, the study addresses a gap in the literature. The research’s innovative approach to utilizing ESG ratings and pillar scores as proxies for ESG performance enhances its originality. Furthermore, the research’s identification of the differing impacts of environmental and governance factors on financial outcomes add novel perspectives to the discourse.

Environmental, social, and governance tools and investment fund portfolio characteristics: a practical-question-oriented review

This paper presents a literature review with the aim of facilitating investment funds to understand the practical question of whether investing responsibly can make a fund's portfolios more sustainable without compromising their return/risk profiles. The study contains most of the leading ESG research from the past two decades. We conclude from this research that the relationship between ESG and return/risk profile is predominantly neutral or even positive. Many scholars have found evidence on the performance of stocks, bonds, and real estate. The findings apply to Environmental, Social, and Governance criteria separately and in different regions. We contribute to the body of knowledge accessible to ESG-asset-seeking funds by complementing the impact investment theory and by linking ESG investment to portfolio-level characteristics and investor preferences. Looking into the future, we identify recent trends and developments in this niche field of ESG at the end of the paper.

The Impact of Inflation on Real Estate Investment Perfomance And Effective Investment Decisions

Purpose: This study aims to examine the impact of inflation on key variables of real estate investment performance and investment decisions. Theoretical Reference: This paper considers several models of real estate investment performance indicators because the effect of inflation on key variables of real estate investment performance is an important factor in investment decisions. Since effective investment decision is key to avert investment loss especially during inflation period, this paper follows the suggestions by Otegbulu (2022) and Georgiv, et al (2002) that property incomes and values are not static during periods of inflation bur responds to economic dynamics, and could infact trigger favourable investment opportunities in real estate. This paper therefore follows these models/suggestions of Otegbulu (2022) and Geoargiv, et al, (2002) to examine several real estate investment to offer appropriate reflection of how inflation impacts of incomes from real estate investment. Method: Data collected were analysed using Pearson Correlation Analysis to determine the relationship between inflation rate and real estate investment performance (measured by annual returns). Regression analysis was also employed on the data to determine the level of contribution or degree of impact of inflation on real estate performance. Also data collected on the exchange rate and real estate performance over the study period were analysed using Pearson Correlation Analysis to determine the relationship between exchange rate and real estate investment performance (measured by annual returns on investment). Regression analysis was also employed on the data to determine the degree of impact of exchange rate on real estate investment performance. Data collected for the analysis and hypotheses testing were secondary data over a period from 2005 – 2022. Result: The study reveals that real estate investment market generates average total annual returns of 21.39% under average inflation rate of 12.5%. The test statistics (Pearson Correlation) results shows that the higher the inflation rate, the lower the performance of the real estate investment. Also, the study reveals that as inflation persists causing exchange rate fluctuations, the test statistics (Pearson Correlation) results shows that higher exchange rate causes lower performance of real estate investment. This could be because more than 90% of the real estate construction materials in the study are imported. Conclusion: It is clear and obvious that inflation impacts highly on real estate and capable of distorting projections in property investment. Rational investors must therefore factor in inflation risk in investment decisions. The study has shown that inflation has significant impact on annual returns of real estate and consequently affects investment performance. The study concluded that the higher the inflation, the lower the performance of the real estate investment and that the continuous rise in inflation rate reduces the purchasing power of the local currency leading to local currency devaluation. Also, it was concluded that higher exchange rate causes lower performance of the real estate in terms of annual returns. Research Implications: One of the major implications of the findings from this study is that as inflation raises the volatility of local currency which adversely affect the cost of construction, real estate investment performance is hindered. The risk element increases which could lead to project cost over-run, abandonment or increased vacancy rate. Investors become skeptical in making investment decisions because of uncertainties. Policy makers should put in place policies and guidelines that will attract cross-border investors who can take advantage of the local currency devaluation to improve their real estate investment portfolios. Originality/Value: The relationship between inflation rate, exchange rate and real estate performance (measured by rate of returns on the investment) is of great concern for real estate practitioners and investors. The study is original well thought efforts of the authors as contribution to real estate practice and education in developing economies currently being threatened by rising inflation. It is believed that this study will be very useful to global investors who will like to invest in the study area in particular and other emerging markets in general.

Development of a financial performance measurement model for real estate business: an exploratory study in India

PurposeThe purpose of this study is to develop a financial performance measurement model for real estate business.Design/methodology/approachThe study uses balanced scorecard (BSC) proposed by Kaplan and Norton (1996) as a theoretical support. The study, being exploratory in nature, uses survey method to collect data on several dimensions of BSC as well as on other performance measures used by real estate businesses in India. The survey data collected is analyzed using exploratory factor analysis (EFA) to explore the model constructs. This is followed by building an integrated conceptual model for measuring the financial performance of a real estate business. The model is tested using partial least squares structural equation modeling (PLS-SEM).FindingsThe study finds that the financial performance of the real estate business revolves around customer satisfaction, employee satisfaction and external networks. The right alignment of these components lead to superior financial performance. It also provides a competitive advantage to the real estate business. These three components (customer satisfaction, employee satisfaction and external networks) have direct and indirect influences on the financial performance of real estate business.Research limitations/implicationsA small sample size (78 respondents), as well as the respondent’s geographical concentration in India, are the limitations of the study. Hence, generalization of findings may be difficult until the findings are validated across the globe.Practical implicationsThe conceptual performance measurement model suggested in this research provides an effective tool to plan and strategize to achieve superior financial performance, particularly for stakeholders in the real estate business.Originality/valueTo the best of the authors’ knowledge and belief, this is the first attempt to develop a comprehensive financial performance measurement model for real estate business and test it using EFA and PLS-SEM.

Determinants of Commercial Real Estate Market Performance: The Case of Addis Ababa, Ethiopia

Numerous social and economic problems are brought on by urbanisation, including worse-than-ever housing shortages in emerging nations and an increase in the number of people living unlawfully in slums without permits or property rights. This is also applicable to Ethiopia. The investigation of the factors influencing Addis Ababa’s commercial real estate market performance was the study’s principal goal. Explanatory sequential mixed method design was used in the study, which took a mixed research strategy. Senior specialists, top business leaders, and other professionals from 35 commercial real estate developers active in Addis Abeba made up the study sample for the quantitative phase. It was decided to employ 163 of the 231 structured and self-administered sets of questions that were provided. This resulted in an actual response rate of 71%, which was deemed both necessary and sufficient for running the relevant statistical analyses. 15 key informants from important government ministries or agencies, as well as relevant industrial sectors, were chosen to participate in in-depth interviews for the qualitative phase of the study. Only ten significant informants, however, volunteered to be interviewed. The quantitative study’s findings revealed that every factor—firm efficiency, supplier dependability, and customer purchase intentions, as well as credit availability, marketing strategy, legal considerations, land availability, infrastructure development, technological adoption, and leadership quality—had a significant and positive impact on Addis Ababa’s commercial real estate market performance. The qualitative analysis found that additional variables such as political and economic instability, the degree of coordination and stakeholder participation, political interference, and house purchasers’ purchasing power influenced commercial real estate performance. To improve performance, the researcher suggests that real estate enterprises adopt an effective strategy that focuses on performance-improving variables and collaborate closely with the government and other stakeholders. Finally, the proposed framework for measuring performance in the commercial real estate business should guide commercial real estate developers.

The Influence Of Solvatibility Ration, Company Size, TATO, ROA, DER On Return Price Of Properties Subsectors In 2019-2021

The purpose of this paper is to analyze the effect of solvency ratios, firm size, total turnover (TATO), return on equity (ROA) and debt-to-equity ratio (DER) on company performance/share prices in real terms. in the real estate subsector. 2019-2021 The purpose of this research is to understand the factors affecting the stock price of real estate. The research method is panel regression analysis, which uses secondary information obtained from the financial statements of listed real estate companies. The research sample consists of several companies in the real estate subsector covering a certain period. The results of the present study show that the solvency ratio, firm size, TATO, ROA and DER significantly affect the performance/share price of companies in the real estate sub-sector. Importance ratios, firm size, and ROA positively affect stock return/price, while TATO and DER affect negatively. This shows that investors tend to pay attention to these factors when evaluating the performance of real estate and determining stock prices. This study helps to understand the factors influencing the performance/share price of companies in the real estate sub-sector. The results of this study can be used as a benchmark for investors, company management and regulatory authorities in making investment decisions and policies related to real estate.

How the Capital Structure Affects the Firm Performance of Real Estate Listed Companies Between 2010 to 2020 in China

The financial structure of a firm is often regarded as the most essential factor influencing its operating performance. The real estate industry, as an important part of China's current national economy, is a typical capital-intensive industry with a large demand for capital. However, the industry's characteristics lead to a relatively slow return of capital in the real estate industry, putting pressure on the industry's financing capacity and capital structure. This paper divides the capital structure into two components: gearing ratio and debt structure, and takes China's real estate listed companies from 2010 to 2020 as a sample. The influence of capital structure on the performance of listed companies is examined empirically. It is found that there is a non-linear relationship between gearing and firm performance, i.e. an inverted U-shaped relationship. This paper still holds after robustness tests such as variable substitution, which are hoped to be useful for business performance, future government regulation and policy implementation.

Analysis of productivity performance of real estate and construction firms in Indonesia

Sustained total factor productivity (TFP) growth of firms is essential to achieve sustained supply growth, which is necessary to solve the housing shortage and affordability problems. Existing productivity literature focuses on large firms whilst smaller firms make a significant contribution to the total supply. This paper investigates the productivity of 363 Indonesian real estate construction firms of medium and large sizes. We estimate Färe-Primont TFP measures under the meta-frontier framework, accounting for differences in the overall technologies under which each group of firms operates. Results deliver several important findings. First, large firms have higher productivity levels than medium firms, but average productivity levels are very low. Second, the productivity growth of large and medium firms is negative, which contributes to the growth of the housing shortage in Indonesia from 2012 to 2016. Third, in case of easier transfer or spill-over of production technologies between two firm groups, firms could enhance further their efficiency and productivity. Fourth, those factors related to branch numbers, legal structure and experience of doing business have positive correlations with the productivity performance of firms in both large and medium groups. Additionally, medium firms could gain higher productivity by diversifying their income. Importantly, our study shows evidence to support that government subsidies have a positive influence on the productivity level of medium firms.

Assessing Office Building Marketability before and after the Implementation of Energy Benchmarking and Disclosure Policies—Lessons Learned from Major U.S. Cities

An increasing number of U.S. cities require commercial/office properties to publicly disclose their energy performance due to the adoption of energy benchmarking and disclosure policies. This level of transparency provides an additional in-depth assessment of a building’s performance beyond a sustainability certification (e.g., Energy Star, LEED) and may lead less energy-efficient buildings to invest in energy retrofits, therefore improving their marketability. However, the research is scarce on assessing the impact of such policies on office building marketability. This study tries to fill this gap by investigating the impact of energy benchmarking policies on the performance of office buildings in four major U.S. cities (New York; Washington, D.C.; San Francisco; and Chicago). We use interrupted time series analysis (ITSA), while accounting for sustainability certification, public policy adoption, and property real estate performance. The results revealed that in some cities, energy-efficient buildings generally perform better than less energy-efficient buildings after the policy implementation, especially if they are Class A. The real estate performances of energy-efficient buildings also exhibited continuously increasing trends after the policy implementation. However, due to potentially confounding factors, further analysis is required to conclude the policy impacts on energy-efficient buildings are more positive than those on less energy-efficient buildings.

Tenant Industry Sector and European Listed Real Estate Performance

This paper extends the empirical evidence on the relationship between the performance of public real estate companies (PRECs) and the industrial sector of their tenants. By investigating the performance of a large sample of European real estate firms from 2010 to 2019 and information pertaining to the firms’ tenants, we find that the systematic risk in the tenants’ industry sectors is capitalized in real estate company equity returns. Our results remain robust after correcting for stock beta modifications, tenant sector alpha, tenant anchor effects, and other tenant characteristics. We consider a hypothetical trading strategy that assumes a long position on PRECs whose occupier base is dominated by tenants belonging to riskier sectors, while the trading strategy shortens PRECs whose tenants belong to less risky sectors. The adoption of this strategy yields benchmark-adjusted annual returns of 3.68%.

Novel evidence on the asymmetric causality between the Chinese stock and real estate markets: evidence from city-level data

Our study re-examines the asymmetric causality between the Chinese stock and real estate markets in 70 cities. Prior research using symmetry hypotheses, has not yet linked these two markets or paid attention to their heterogeneity. We uniquely employed the nonlinear autoregressive distributed lag model, which permits the exploration of bidirectional asymmetric causality. Decreases and increases in stock prices caused short-run changes to real estate prices in 18 of the cities studied; this short-run effect was ultimately carried on in Guangzhou and in three cities. Even after switching the study variables, similar results were obtained. Our findings show that real estate policymakers in specific cities need to take into consideration the asymmetric performance of real estate prices as caused by the asymmetry within stock prices. If government stabilises the real estate market, it can in turn facilitate stock-market stability.

The performance of non-listed opportunity real estate funds in China

PurposeOpportunity real estate funds are an important style of real estate investing for institutional investors seeking nonlisted real estate exposure. Importantly, institutional investors have sought exposure to the China real estate market, often via opportunity real estate funds. This has been by a pure China opportunity real estate fund (100% China opportunity real estate) or by a pan-Asia opportunity real estate fund where China opportunity real estate was part of this pan-Asia opportunity real estate portfolio. Using two bespoke China opportunity real estate indices developed by the authors, this paper aims to assess the risk-adjusted performance and portfolio diversification benefits of China opportunity real estate in a mixed-asset portfolio over 2008–2020. It also highlights critical issues for institutional investors going forward to factor into their real estate investment decision-making for effective China real estate exposure.Design/methodology/approachThis paper develops two bespoke China opportunity real estate fund performance indices to assess the risk-adjusted performance and portfolio diversification benefits of China opportunity real estate funds in a mixed-asset portfolio over 2008–2020. An asset allocation diagram is used to assess the role of China opportunity real estate in a mixed-asset portfolio via both the non-listed and listed real estate investment channels.FindingsOver 2008–2020, China opportunity real estate exposure via pan-Asia opportunity real estate funds were seen to outperform pure China opportunity real estate funds. In both formats, China opportunity real estate funds were seen to have a significant role in a China mixed-asset portfolio across most of the portfolio risk spectrum; particularly compared to listed real estate exposure in China. On-going issues regarding real estate risk management in China will take on increased importance for institutional investors seeking China real estate exposure.Practical implicationsOpportunity real estate funds are an important style of real estate investing, often used by institutional investors to gain non-listed real estate exposure in a developing real estate market. This style of real estate investing has been popular with institutional investors seeking exposure to China real estate as part of the China economic growth dynamic. The results of this research highlight the importance of opportunity real estate investing in China, both via a pure China opportunity real estate fund and via a pan-Asia opportunity real estate fund. Based on this empirical analysis, China opportunity real estate exposure is seen to be more effective via a pan-Asia opportunity real estate fund than a 100% China opportunity real estate fund. A range of practical China real estate investment issues are also highlighted for the effective delivery of China real estate exposure for institutional investors going forward; this particularly relates to the on-going risk management for real estate investment in China.Originality/valueThis paper is the first empirical research analysis of the risk-adjusted performance of China opportunity real estate and its role in a mixed-asset portfolio. Using bespoke China opportunity real estate fund indices developed by the authors, this research enables empirically-validated, more informed and practical opportunity real estate investment decision-making regarding the strategic role of China opportunity real estate in an institutional investor's portfolio. It also highlights the importance of various facets of real estate risk management in China going forward.

Housing Performance and the Electorate

The electorate is concerned with personal financial and macroeconomic conditions in addition to policy issues and tends to hold the incumbent party accountable when voting. The performance of the United States’ largest asset class, residential real estate, should influence individual voter behavior. According to economic voting theory and the “homevoter” hypothesis, homeowners will be more supportive of policies that are perceived as beneficial to their property value. We investigate this relationship in the US residential real estate market by evaluating the effects of heterogenous county-level housing market performance on voter behavior in national presidential elections and find counties with superior house price performance in the four years preceding an election are more likely to “vote-switch” to the incumbent party. Counties with relatively inferior house price performance in the four years leading up to the election are more likely to switch their vote from the incumbent to the challenging party. The relationship is strongest in the years closest to an election and in counties that rank in the higher quartile of housing price performance. Election outcomes in “swing” counties are particularly vulnerable the local real estate economy. To our knowledge, this is the first study to link heterogeneous local residential real estate performance over a series of national election outcomes.

Post-COVID-19 Real Estate Net Absorption and Social Capital in U.S. Metropolitan Areas

The authors of this article studied the differential impact of the COVID-19 pandemic on the performance of office real estate markets using a sample of major U.S. metropolitan areas. During the pandemic, social capital became a significant determinant of net absorption and mitigated the decline in net absorption due to the impact of COVID-19. They found that social capital in U.S. metropolitan areas as measured by the density of social networks has a significant positive effect on net absorption in a post-COVID-19 period. The results suggest that social capital contributes to an increase in net absorption values by promoting trust and communication among members of a community, which increases the likelihood of a completed transaction resulting in more leasing contracts.

ESG in corporate real estate management: global trends and Russian experience

Environmental, Social, and Governance (ESG) factors have gained increasing importance in corporate real estate management in recent years. This article provides a comprehensive review of current trends and practices regarding the integration of ESG factors in corporate real estate management. The methods used to obtain the results include a thorough review of relevant literature and case studies. The results show that ESG factors have a significant impact on corporate real estate performance, and there is a growing trend of companies integrating ESG factors into their real estate management strategies. The discussion emphasizes the significance of the results and their implications for future research and practice. The article concludes with a summary of the main findings and recommendations for real estate managers to effectively integrate ESG factors into their strategies.

Face‐to‐face interactions, tenant resilience, and commercial real estate performance

AbstractWe study the impact of face‐to‐face (FTF) interactions on commercial real estate (CRE) performance. By linking tenants, properties, and CRE firms, we construct three novel FTF measures that capture tenant remote working, internal communication between coworkers, and external contact with customers. Using the COVID‐19 pandemic as an exogenous shock to the FTF economy, we find that firms holding properties with tenants that are more resilient to social distancing perform better. These FTF effects weaken over the long term, however. As investors are capable of compiling valuable information at granular levels regarding how tenants operate, our findings support market efficiency and shed light on postpandemic CRE performance.