Property Investment Decision Research Articles

Better energy cost information changes household property investment decisions: Evidence from a nationwide experiment

With buildings accounting for roughly 40 % of energy consumption in the US and Europe, energy efficiency upgrades will be central in meeting climate targets. Using a nationwide controlled field experiment, we find that the inclusion of property-specific energy cost labels within property advertisements increases energy efficiency premiums. We also show that more energy efficient properties sell faster and, for the first time, that energy cost labels shortened time-to-sell. While a major departure from existing property labelling policy, these results suggest that framing property energy efficiency according to their cost implications, rather than in energy units, increases the demand for energy efficiency.

The soft computing based model of investors’ condition and cognition on a real estate market

Real estate is a significant tangible asset for every human. Many individuals typically make a property investment decision at least once in their lifetime. Humans have limited knowledge of the surroundings in which they live and a limited capacity to process information. When making decisions, the decision-maker seeks to simplify cognitive processes and prefers solutions that are satisfactory from the point of view of survival rather than ensuring maximum profit (especially financial). The goal of an aware decision-maker is not to have the most information but to have the 'right' information. On the other hand, information on the property market is called imperfect caused mainly by a lack of behavioral component that contains this 'missing' information. Due to this fact, the authors assumed to create the soft computing based model to provide a behavioral component for the identification of property investors' decision-making motives in the residential market. The results confirm that it is possible to indicate a pattern of the profiles of real estate entities according to particular categories of investors' condition and cognition.

Ethno-religious Conflict in Kaduna, Nigeria: Perceptual implications for Residential Property Development

This study investigates the causes of ethno-religious conflicts prevalence in Kaduna and its attendant influence on residential property development decisions in Kaduna, Nigeria. Data was collected through structured questionnaires and administered by trained Assistants to residential property owners/investors in selected neighbourhoods of Kaduna North and Kaduna South. A total of 5,439 questionnaires were administered to respondents (Property Owners/Investors) and 3,431 was retrieved. This includes 1,608 from Kaduna North and 1,823 from Kaduna South representing a total of 63.08% response rate. Quantitative data obtained from the questionnaires were analysed using descriptive statistics and logistic regression. The findings indicate that in Kaduna North, the incessant ethno-religious conflicts in the area, resulted to problems associated with low occupancy ratio occasioned which is a consequence of voids in many completed residential properties in the area, negatively affected investment decisions (B = 1.275, p = 0.049). In Kaduna South, the incessant conflicts in the area resulted to more significant problems which negatively affected residential property investment decisions including property loss due to violent attacks (B = -1.102, p < 0.001), limited access to financing (B = -3.392, p < 0.001), overall insecurity in the location (B = -1.816, p < 0.001), low property demand (B = 9.269, p < 0.001), and challenges with disposal and attracting quality tenants/occupants/buyers (B = -7.029, p < 0.001). The study recommends the need for strengthened security measures, improved access to financing, peace-building initiatives, infrastructure development, market support and capacity building. These findings provide valuable insights for policymakers and stakeholders in residential property development ventures in developing targeted strategies to promote sustainable residential property development in Kaduna.

Economic fundamentals and house prices in Namibia: comparative evidence from real and interpolated data

Purpose The primary aim of this paper is to concurrently use the data types to enhance econometric analysis in the housing market in developing countries, particularly Namibia. Design/methodology/approach Scholarly discussions on econometric analysis in the housing market in sub-Saharan Africa suggest that the inadequacy of time series data has impeded studies of such nature in the region. Hence, this paper aims to comparatively analyse the impact of economic fundamentals on house prices in Namibia using real and interpolated data from 1990 to 2021 supported by the ARDL model. Findings It was discovered that in all the three types of data house prices were affected by fundamentals except real GDP in the long term. It was also noted that there were not much significant variations between the real data and the interpolated data frequencies. However, the results of the annual data and the semi-annual interpolated data were more analogously comparable to the quarterly interpolated data Practical implications It is suggested that the adoption of interpolated data frequency type should be based on the statistical significance of the result. In addition, the need to monitor the nexus of the housing market and fundamentals is necessary for stable and sustainable housing market for enhanced policy direction and prudent property investment decision. Originality/value The study pioneer to concurrently use the data types to enhance econometric analysis in the housing market in developing countries.

Project Delays and Project Property Investment Decisions in Apartments: A Literature Review

Apartment housing has become an option in big city areas, especially as land is becoming increasingly scarce and expensive. Apartment investment is an investor's choice at a time when demand is increasing every year along with the growth of the urban economy. Apartment construction projects begin construction based on appropriate planning to produce buildings of the right quality, cost, and time by minimizing one aspect of risk, namely the project delay factor. This article aims to present studies related to construction project delay factors; apartment buildings; investment analysis; and the impact of project delays on investment interest. The results show that construction delays have an impact on construction costs and time and further research is needed on the effects on investors' investment interest.ABSTRAKHunian apartemen menjadi salah satu pilihan di Kawasan kota besar terlebih lahan yang semakin berkurang dan mahal. Investasi apartemen menjadi pilihan investor di kala kebutuhan yang semakin tinggi tiap tahunnya seiring bertumbuhnya perekonomian di perkotaan. Proyek konstruksi apartemen memulai pembangunan yang didasarkan pada perencanaan tepat guna untuk menghasilkan bangunan yang tepat mutu, biaya dan waktu dengan meminimalkan salah satu aspek risiko yaitu faktor keterlambatan proyek. Artikel ini bertujuan memaparkan kajian terkait: faktor keterlambatan proyek konstruksi; bangunan apartemen; analisa investasi; dampak keterlambatan proyek terhadap minat investasi. Hasil didapatkan bahwa keterlambatan konstruksi berdampak terhadap biaya dan waktu konstruksi dan diperlukan penelitian lebih lanjut efek terhadap minat investasi investor.

Assessment of Residential Real Estate Investment Performance in Lafia Metropolis, Nigeria

Investors are expected to be guided through investment performance measurement and analysis in order to safeguard against potential loss of investment returns or the capital invested. Whereas residential real estate (RRE) constitutes a significant part of the portfolios of individual and institutional investors across the globe, the assessment of risk-return performance of RRE investment in Nigeria generally has not been well researched. Investors in real estate (RE) in the Lafia city of Nasarawa State, like other cities in Nigeria, still rely on mere intuition, sales comparison and the rule of thumb in real estate investment decisions-making. Consequently, these ill-informed investors often venture into poorly conceived and subsequently financially disastrous real estate investment projects thereby failing to achieve their desired investment objectives. Hence, this research was conducted to evaluate the performances of RRE investment in Lafia metropolis of north-central Nigeria with a view to guiding existing and potential real estate investors and practitioners in the region in making informed property investment decision. A survey research design was adopted to collect transacted residential property value data from estate surveying and valuation firms as well as reputable estate agent offices in the study area. Mean scores, property value index and holding period return model were used to analyse the rental/capital value indices and total return performance respectively. The modified value-at-risk model was used to assess risk while the modified Sharpe ratio was used to evaluate the risk-return performance of RRE investment performance in the study area. The research findings revealed, among others, a progressive increase in rental and capital values of RRE within the study period. RRE investment showed an average rental growth of 6.8% per annum and capital value growth of 9.4% per annum. On the basis of investment returns, it was found that Angwan Doka outperformed other selected neighbourhoods in the study area with an average mean total return and risk-adjusted return of 13.76% and 0.80% per annum respectively while Shabu underperformed other locations with average mean total return and risk-adjusted return of 12.17% and 0.55% per annum. The study recommended, among others, that potential real estate investors should consider investing in residential real estate in Angwan Doka since this location gives higher total and risk-adjusted returns on residential property investment relative to other locations in the city.

Factors Influencing Stakeholders’ Decision to Invest in Residential Properties: A Perceptual Analysis of Flood-Risk Areas

The ground can become saturated during prolonged downpours. If sewers and drains are unable to cope, overflows will be inevitable. This situation could affect properties that are not designed to cope with flood hazards. It is pertinent that property investors should consider flooding and the likelihood of its occurrence when making investment decisions. The question is, “do they?” This study investigates the factors that influence residential property investment decisions in flood-risk areas of the Lagos metropolis. This is achieved by evaluating a range of locational, neighbourhood, structural, market/economic, behavioural, and risk characteristics in the determination of residential property investment choices in areas that are susceptible to flood risk. The data were sourced from private investors and registered real estate agents in the risk areas of Lagos State, Nigeria. Structured questionnaires were used for data collection purposes, and only valid responses were used for the data analysis. The results show that the availability of infrastructural supply, the crime rate in the neighbourhood, and the property location could significantly motivate investors’ decisions with respect to property investment in flood-risk areas. The perception plot shows that behavioural factors have the highest bearing on the investment decisions for private investors, at 4.4, followed by economic factors at 4.0 and locational factors at 3.6. The plot also shows that neighbourhood factors have the highest bearing on the investment decisions for estate agents, at 4.6, followed by economic factors at 4.0 and locational factors at 3.6. This implies that there are various degrees of correlation between the factors examined in this study. It is important to highlight the relevance of the findings for the field and pave the way for future scientific development in flood-risk management.

Location Analysis for Retail Property Investment -A GIS Based Approach: Case Study of Blantyre City

Although there is an increased retail property investment interest, location analysis for retail outlets is inadequate. Site selection is the most significantprocess in retail property investment decision making. Duetoitscomplexity,locationdeterminationcancontributetothesuccessorfailure of real estate investment. Optimal location is relevant in a competitive market as it contributes to guaranteed increased returns. Real estate investors can evaluate a set of potential sitesforlocatinganewretailoutlet.Thisstudy aimedatanalyzing howGIScan contribute to the success of retail property investment positioning through spatial data analysis. Thestudy used GIS application to find optimal location for retail property investment in Blantyre City, Malawi. The criteria for finding suitable sites were demographics, transportation and competiveness. The findings presented the applicability, efficiency and productivity of using GIS in location analysis. Based on the findings GIS can helpinidentifyingoptimallocationthroughmaximizing retail store patronage thereby increasing retail investment return.

Property investment decision in Batam City

The aim of this research is to find out factors affecting property investment decision in Batam. Investment decision is defined as how a person decides on investment to select the right alternative and type of business. The independent variables in this study are accounting information, self-image/firm-image coincidence, neutral information, advocate recommendations, and personal financial need. The object of this study is property investors in Batam. This study distributed 300 questionnaires and selected 250 questionnaires to be processed/analyzed. The results show that accounting information does not significantly affect the investment decision, meanwhile self-image/firm-image coincidence, neutral information, advocate recommendations, and personal financial need significantly affect investment decision in Batam.

Effect of Residential Property Location on Tenants’ Willingness to Pay in Akure, Nigeria

The study examined the effect of residential property location on tenants’ willingness to pay in Akure with a view to providing adequate information that would help in residential property investment decision making in the study area. A structured questionnaire was used in collecting data from the tenants of residential properties within the selected areas. Questionnaires were distributed to Two Hundred and Eighty Two Tenants of residential properties that were selected via simple random sampling method. One hundred and ninety six (196) were retrieved representing 69.50% of the sample selected. Data collected were analyzed using contingent valuation and binary logistic regression model. Result of data obtained revealed that 57.14% of the respondents responded positive willingness to pay for residential property location while 42.86% reported zero willingness to pay for residential property location. The study further showed the bid amount tenants were willing to pay for various improvements in the residential property location, 49.11% of the respondents are willing to pay between 5-10% above the current rent for traffic noise reduction. For provision of infrastructure such as good road, electricity and water supply, 30.36% of the respondents are willing to pay between 5-10% above the current rent. Factors that influence their willingness to pay for residential location includes length of stay in the property, marital status, age, occupation, income, rent, nearness to place of work, security, electricity supply and water supply amongst others. It was recommended that real estate property owners and developers should consider location critically before embarking on residential property building projects in order to yield optimum returns. Keywords: Residential Properties, Residential Properties Location, Tenants, Willingness to pay. DOI: 10.7176/EJBM/14-3-03 Publication date: February 28 th 2022

Investigating the Impact of Firm Specific Determinants of Non-Pension Fund on Property Investment Decisions: An Evidence from Zanzibar Social Security Fund in Tanzania

The aim of this study was to look at the impact of firm specific determinants of non-pension fund on property investment decisions, a case study of Zanzibar Social Security Fund (ZSSF) in Tanzania. The unit root test, co-integration, and vector error correction model (VECM) were used for estimation in the linear econometric model equation, which looked at the impact of three firm specific determinants of non-pension fund on property investment decisions: urbanization (URB), inflation rate (INF) and interest rate (IR). The estimated result showed that, there was presence of long-run relationship at equilibrium between property investment decisions (PID) in ZSSF and all tested determinants of property investment decisions. The results revealed that urbanization (URB) had positive significant long run relationship with property investment decisions in ZSSF. But it was further revealed that the inflation rate (INF) and interest rate (IR) had negative relationship with PID at ZSSF, though they were statistically significant. The results also revealed unidirectional causality relationship whereby PID causes IR. Furthermore, the results revealed unidirectional causal relationship from URB to PID at 5% level of significant. However, the result revealed that PID and INF were not granger cause each other in a short run. The study then recommends among others, that management of ZSSF has to consider these determinants when they make property investment decisions, this including, the need for management of Zanzibar Social Security Fund to work together with financial institutions like banks to develop a working formula on how they can facilitate mortgage facility at reasonable rate for residential and commercial properties, this will help to increase demand for real estate to society.

The Effect of Geographical Diversification Towards Property Investment Decisions in Indonesia

The Effect of Geographical Diversification Towards Property Investment Decisions in Indonesia

Appraising Trends in Residential Property Investment Returns Relative to Infrastructure Conditions in Ilorin, Nigeria

Infrastructure serves as an indicator to make real estate investment flourish, build the platform for the real estate investment market to thrive, and also to boost returns on property investment. Despite availability of some infrastructure,the property investment market still plagued with less expected returns as a result of non-functionality of neighborhood infrastructure. The study focused on the appraisal of the trends in residential property investment returns between year 2009 to 2018, relative to infrastructure condition in the study area. Data were obtained from practising real estate firms and residents of selected neighborhoods using a structured questionnaire. The study adopted simple random sampling technique. Out of 2,228 questionnaires administered in the selected neighborhoods, in Ilorin, 664 were returned and valid for the analysis. Descriptive mean method of data analysis was employed, coefficient of variation and spearman’s rank-order correlation model was adopted to comparethe property investment return in the selected areas of Ilorin and to determine the infrastructure indexwith benchmark for the minimum acceptable standard condition. Also, Kendall coefficient of concordance was also used to test the relationship among the ranked factors. The result shows that Sabo-Oke and Fate property market of Ilorin performed better than Adewole Housing Estate and GRA (Government Reservation Area) based onrisk-return ratio analysis, of which Sabo-Oke and Fate revealed the most consistent property market returns while GRA and Adewole Housing Estate residential market showed high level market volatility due to risky nature of the market. Sabo-Oke and Fate markets showed a stable market at minimum risk ranges between 8%-36%. The infrastructure condition indices in GRA and Adewole Housing Estate is higher than ideal condition index (Benchmark), ranges between 82%-92% and 81%-94% when compared with the average international standard at 60%, while infrastructure conditions in Sabo-Oke and Fate found a bit below the average international standard condition. The study also found that the performance of residential property investment is magnificent in the area where there is a frequent market transaction with good and functional infrastructure, as it is discovered across the selected neighborhoods in Ilorin. The study concluded that infrastructure have weighty influence on residential property investment returns relative to functional infrastructure and that, residential property market performance hinges on functional infrastructure and it must be given extreme consideration when making a property investment decision.

PENGARUH PENDAPATAN TERHADAP PERMINTAAN PROPERTI KOMERSIAL DAN KEPUTUSAN INVESTASI DI KOTA SEMARANG

This study aims to obtain empirical evidence of the effect of income on property demand and property investment decisions in Semarang City. Research gaps and practical data indicate that an increase in income does not always coincide with an increase in decisions to investment dicisions. The independent variable in the study is income, while the dependent variable are investment decisions and property demand.
 The population used in this study are residents of Semarang City who purchase commercial properties for future investment purposes and number of sampe is 97 people, taken by purposive sampling technique. The data collection method used a questionnaire.
 The findings of this study prove there is a positive-significant effect of the income on investment decisions and on property demand.

An Analysis of Land Use Succession and Property Value in Ile-Ife, Nigeria

Land use succession systems have played a crucial role in cities transformation, evading and mitigating the adverse impacts on property value and unplanned development. However, such developments were not aimed at ensuring orderly spatial development which is consistent with land use and sustainable development. This study determined the trends in properties values between the year 2002 and 2016 and examined the relationship between rental values and types of Land Use Succession (LUS) in Ile-Ife, Nigeria. This was to provide information that could enhance property investment decision. 
 Both primary and secondary data were used for the study. Primary data were obtained through the use of the questionnaire. This was administered to landlords, Estate Surveyors and Valuers and on the official of Ife Central Town Planning and Land Services Department. Data were collected from the respondents on the three major roads where LUS was prevalent. Four hundred and fifty buildings were identified out of which 50% were selected. Data collected were analyzed using descriptive and inferential statistics such as trend analysis and Analysis of variance (ANOVA). 
 The result showed that residential properties increased by 42.2% while commercial property increased by 57.8% between the year 2002 and 2016. The result also showed a significant statistical relationship between properties values and types of LUS with corresponding P-values of 0.000, 0.000 and 0.019 for residential-commercial, residential cum commercial and residential-religion types of LUS respectively. The study concluded that an increase in rental value as a result of LUS is capable of enhancing property investment decision.

The development and initial performance analysis of REITs in Ireland

PurposeThe inception of REITs in Ireland in 2013 presented an additional property investment opportunity to Ireland’s commercial property investment landscape. Importantly, the Irish REIT market is an institutional apparatus with an objective to rejuvenate Ireland’s commercial property market. The purpose of this paper is to provide an empirical validation of the performance of Irish REITs over the period March 2015 to February 2019 across several investment measures such as risk-adjusted returns and diversification benefits.Design/methodology/approachUsing monthly total returns in local currency, the risk-adjusted performance and portfolio diversification attributes of Irish REITs are assessed. The mean-variance framework is utilised to assess the potential added-value benefits of Irish REITs in a mixed-asset portfolio.FindingsIrish REITs delivered the strongest average annual return performance, lower relative volatility vs the stock market and competitive overall risk-adjusted performance. The results affirm the characteristic of Irish REITs as a total return-focussed income-driven property investment asset class. The optimal asset allocation analysis shows that Irish REITs are an important ingredient in a mixed-asset investment framework, as their allocation could be scaled effectively across the portfolio risk-return spectrum.Practical implicationsIrish REITs are an emerging investment opportunity for investors seeking exposure in the strongly performing property market in Ireland in the post-Global Financial Crisis period. They are also regarded as an effective alternative conduit to private investment routes (i.e. direct property and non-listed property funds), with the added advantage of being more liquid and versatile than their private property investment counterparts. Importantly, Irish REITs fulfilled the purpose for which they were originally designed. The promising initial performance observed in this paper gives a useful context to what the future might hold for Irish REITs, given the strong interest for commercial property assets in Ireland from both local and cross-border property investors.Originality/valueThis paper is the first empirical research aimed at providing an initial empirical performance validation of Irish REITs as an effective route to commercial property exposure in Ireland. This research enables empirically validated, more informed and practical property investment decision making regarding the strategic role of Irish REITs in a portfolio.

The evolution of Belgium REITs

PurposeThe Belgium Real Estate Investment Trust (REIT) market was created primarily to facilitate a transparent, professionally managed and fiscally efficient market, providing access to the European property markets. Being the 2nd oldest REIT market in Europe, it has undergone many evolutionary changes over the years that add to its considerable stature as a sophisticated investment opportunity. This includes an increased recent focus on the social infrastructure property sectors such as healthcare, care facilities and nursing homes, consistent with the evolving investment mandates requiring stronger integration of environmental, social and governance (ESG) aspects in the investment strategy formulation. The purpose of this paper is to highlight the strategic transformation of Belgium REITs and empirically assess their performance attributes over 1995–2018. Sub-period performance dynamics of Belgium REITs in the pre-global financial crises (GFC) (1995–2007) and post-GFC (2009–2018) contexts are provided.Design/methodology/approachIn total, 23-year monthly total returns over 1995–2018 were used to analyse the risk-adjusted performance and portfolio diversification potential of Belgium REITs. The traditional mean-variance portfolio optimisation model using the ex-post returns, risk and correlation coefficient of Belgium REITs and other financial assets was developed to determine the added-value benefits of Belgium REITs in a diversified investment framework. The analysis was further extended to cover the sub-periods of pre-GFC (1995–2007) and post-GFC (2009–2018).FindingsThe results of the analysis provide a strong investment case for Belgium REITs, as they are able to deliver a discernible premium in the total return performance, superior risk-adjusted returns and strong diversification benefits with the stock market in a long-term investment horizon. Broadly consistent results are similarly observed in the sub-period analysis over varying market conditions. Importantly, the role of Belgium REITs in a diversified investment framework was also empirically validated, as they enhanced the mixed-asset portfolio performance comprised of the traditional asset classes of stocks and bonds across a broad portfolio risk-return spectrum. Dividend yield was also found to be a key component of the financial performance of Belgium REITs.Practical implicationsThe Belgium REIT market has evolved to become the 5th largest market in Europe by the capitalisation volume. This is mainly due to the robust regulatory support and innovations since its debut which have resulted in a polished framework that is both supportive and attractive to financial players and investors. The broad direct consequence of this paper is to highlight the performance attributes of Belgium REITs, adding clarity to the ongoing discussion regarding the viability of European REITs as a liquid and tax transparent route for institutional investors to obtain their property exposure. The strong dividend yield and ESG/social infrastructure focus of Belgium REITs sees Belgium REITs well-placed going forward to meet the evolving investment mandates from major investors.Originality/valueThis paper is the first empirical investigation that elucidates the risk-adjusted performance and role of Belgium REITs as an important property investment opportunity. It equips investors and practitioners with an independent and comprehensive empirical validation of the strategic role of Belgium REITs in a portfolio. Well-informed and practical property investment decision making regarding the use of Belgium REITs for access to the property asset class is the main outcome of this paper.

The significance of residential REITs in Japan as an institutionalised property sector

PurposeResidential Real Estate Investment Trusts in Japan (residential J-REITs) have become an increasingly significant listed property sector recently. The purpose of this paper is to assess the effectiveness of residential J-REITs in a mixed-asset portfolio context in Japan by assessing the significance, risk-adjusted performance and portfolio diversification benefits of residential J-REITs over July 2006–August 2018. The ongoing property investment implications for residential J-REITs are also identified.Design/methodology/approachUsing monthly total returns, the risk-adjusted performance and portfolio diversification benefits for residential J-REITs over July 2006–August 2018 are assessed. An asset allocation diagram is employed to assess the role of residential J-REITs in a mixed-asset portfolio context in Japan.FindingsResidential J-REITs generally delivered superior risk-adjusted returns compared with the other sub-sector J-REITs, stocks and bonds in Japan over July 2006–August 2018, with desirable portfolio diversification benefits in the full mixed-asset portfolio context. Importantly,residential J-REITs are observed as strongly contributing to the mixed-asset portfolio context in Japan across the portfolio risk spectrum, particularly in a post-GFC context. This also reflects that residential J-REITs provide high portfolio returns and strong portfolio diversification benefits in a mixed-asset portfolio context in Japan.Practical implicationsResidential J-REITs are effective and liquid residential property investment exposure in Japan. The results highlight the strong risk-adjusted performance of residential J-REITs in Japan’s mixed-asset portfolio context. This suggests institutional investors, particularly Japan institutional investors, should consider including residential J-REITs in their mixed-asset portfolios, as residential J-REITs are seen as a compelling investment product co-existing alongside the other sub-sector REITs and major asset classes in institutional investor portfolios in the context of Japan. This also confirms the effectiveness of institutionalised residential J-REITs. Given the solid residential property market fundamentals in Japan, an increased level of the institutionalisation of residential J-REITs can be expected.Originality/valueThe study is the first study to assess the effectiveness of residential J-REITs, via assessing the significance, risk-adjusted performance and portfolio diversification benefits of residential J-REITs and their role in a mixed-asset portfolio context in Japan. This research enables more informed and practical property investment decision making regarding the value-added and strategic role of residential J-REITs as effective and liquid residential property investment exposure in Japan, as well as an increasingly institutionalised property sector going forward.

The emergence of data centres as an innovative alternative property sector

PurposeAs one of the increasingly important alternative property sectors, data centres are a technology-focused property sector that is taking advantage of the growing investment intensity in technology-related infrastructure, against the backdrop of constant innovation and advancement in technology. The purpose of this paper is to assess the preliminary risk-adjusted performance and portfolio diversification benefits of data centre Real Estate Investment Trusts (REITs) in the USA, Australia and Singapore. The strategic implications going forward for data centres as an innovative property sector in the property investment space are also highlighted.Design/methodology/approachUsing monthly total returns, the average annual return, annual risk, risk-adjusted performance and portfolio diversification benefits of data centre REITs in the USA, Australia and Singapore over 2016–2018 are assessed. Optimal asset allocation analysis is performed to investigate the value-added role of data centre REITs in a mixed-asset portfolio.FindingsData centre REITs delivered strong average annual return performance, outperforming the composite REITs in all three markets. This also sees data centre REITs being riskier than the overall REIT sector due to the non-traditional and maturing status of the data centre property sector. On a risk-adjusted basis, competitive performance was recorded for data centre REITs, with data centre REITs in the USA and Singapore outperforming their respective composite REITs. This performance is also delivered with significant portfolio diversification benefits with the stock market, resulting in data centre REITs contributing to the US mixed-asset portfolios across a diverse risk spectrum.Practical implicationsInstitutional investors are now giving increased emphasis to alternative property sectors with better risk-return trade-offs. Improved performance and diversification benefits are achieved by supplementing existing property portfolios with non-traditional property sectors with counter-cyclical risk-return profiles, one of which is the data centre property sector. This sees data centres as an important alternative property sector, having technology-based drivers and being recognised as having a clear path towards institutionalisation with the major investors in the near future.Originality/valueThis paper is the first published empirical research analysis that specifically assessed the preliminary performance and diversification benefits of data centre REITs in the USA, Australia and Singapore. This research enables empirically validated, more informed and practical property investment decision making by institutional investors regarding the future strategic role of the data centre property sector as an innovative sector in the institutional property investment space.

The emergence of student accommodation as an institutionalised property sector

PurposeAmongst the alternative property sectors, student accommodation has recently become an important institutionalised property sector for pension funds and sovereign wealth funds in the global property landscape, particularly in the UK. The purpose of this paper is to assess the significance, risk-adjusted performance and portfolio diversification benefits of student accommodation in a UK property and mixed-asset portfolio over 2011–2017. Drivers and risk factors for the ongoing development of the student accommodation sector are also identified. The question of student accommodation being a proxy for residential property exposure by institutional investors is also assessed.Design/methodology/approachUsing annual total returns, the risk-adjusted performance and portfolio diversification benefits of UK student accommodation over 2011–2017 is assessed. Asset allocation diagrams are used to assess the role of student accommodation in a UK property portfolio and in a UK mixed-asset portfolio for a range of property investor types.FindingsUK student accommodation delivered superior risk-adjusted returns compared to UK property, stocks and REITs over 2011–2017, with portfolio diversification benefits. Importantly, this sees UK student accommodation as strongly contributing to the UK property and mixed-asset portfolios across the entire portfolio risk spectrum and validating the property industry perspective of student accommodation being low risk and providing diversification benefits. Student accommodation is also not seen to be a proxy for residential exposure by institutional investors.Practical implicationsStudent accommodation is an alternative property sector that has become increasingly institutionalised in recent years. The results highlight the important role of student accommodation in a UK property portfolio and in a UK mixed-asset portfolio. The strong risk-adjusted performance of UK student accommodation compared to UK property, stocks and REITs over this timeframe sees UK student accommodation contributing to the mixed-asset portfolio across the entire portfolio risk spectrum. This is particularly important, as many investors (e.g. pension funds, sovereign wealth funds) now see student accommodation as an important property sector in their overall portfolio.Originality/valueThis paper is the first published empirical research analysis of the risk-adjusted performance of UK student accommodation, and the role of student accommodation in a UK property portfolio and in a UK mixed-asset portfolio. This research enables empirically validated, more informed and practical property investment decision making regarding the strategic role of student accommodation as an alternative property sector in a portfolio.