Residential Real Estate Investment Research Articles

The restless urban landscape of housing financialization: geographies of residential real estate investment trust expansion in Germany and the United States

ABSTRACT The expansion of Residential Real Estate Investment Trusts (R-REITs) represents an important frontier in the financialization of housing and cities. This paper advances the literature on institutional real estate investment and corporate landlordism by analyzing how and where the 15 largest, publicly-listed R-REITS and REIT-like funds in Germany and the US are growing today. First, we introduce the metaphor of the feeding machine to characterize how key actors like the state, private equity, and exchange-traded funds (ETFs) provide R-REITs with the properties, capital, and imperative to grow. Second, we find four geographical expansion strategies at work: (1) investment beyond mainstream asset classes: from multi-family apartments and single-family rentals to student flats, care homes, and mobile home and recreational vehicle sites, (2) the concentration and consolidation of ownership, through mergers and acquisitions and focused investment in select markets, (3) acquisition across national borders, and (4) institution-led new construction. Despite crucial nuances in individual R-REIT strategies and the housing systems of each country, our comparative analysis reveals shared trajectories and rationalities of expansion. We posit that ETFs and the indexes through which they allocate investment increasingly shape the restless urban landscape of R-REIT growth, pumping liquidity into spatially fixed assets.

Exploring the spatialisation of the performance of residential REITs investment and direct investment in the housing market

ABSTRACT Despite numerous studies about the housing sector, the connection between the performance of residential real estate investment trusts (REITs) investment and direct investment in the housing market is still under-researched. To help fill this gap, we used quarterly data of the Australian Securities Exchange (ASX) residential REITs index and direct housing returns of Australia and its major cities, spanning March 1983 to June 2021, and adopted a suite of econometric methods to document the following findings. First, publicly listed housing (residential REITs) and private housing markets are not separated, but both are closely related in terms of their investment performance. Second, the performance of direct investment in the housing market of Adelaide, Brisbane, Melbourne and Sydney could lead to positive investment performances for residential REITs over time, while no comparable evidence is found for Canberra, Darwin, Hobart and Perth. Third, further analyses revealed a one-way direction of performance, flowing from the housing market of Brisbane, Melbourne and Sydney to residential REITs, while no similar evidence of performance flow was found for Adelaide. Our study has provided new evidence that could contribute to the discussion on the expansion of residential properties in the portfolio of institutional investors.

Modelling the effect of macroeconomic factors on residential real estate investment returns in Abuja and Lagos, Nigeria

PurposeThis study evaluated the effect of macroeconomic factors on residential real estate (RE) investment returns in the cities of Abuja and Lagos, Nigeria, with a view to guiding RE investors and researchers.Design/methodology/approachA survey research design was employed using a questionnaire to collect RE transaction data from 2008 to 2022 from estate surveying and valuation firms in the study areas. Rental and capital value data collected were used to construct rental and capital value indices and total returns on investment. The macroeconomic data used were retrieved from the archives of the Central Bank of Nigeria (CBN). Granger causality (GC) and multiple regression models were adopted to evaluate the effect of selected macroeconomic variables on residential RE investment returns in the study areas.FindingsThe study found a progressive upward movement in rental and capital values of residential RE investment in the study areas within the study period. Total and risk-adjusted returns on investment were equally positive within the study period. Only the inflation rate, unemployment rate and real gross domestic product (GDP) per capita were found to be the major determinants of residential RE investment returns in the study areas within the study period.Research limitations/implicationsThe secrecy associated with property transaction information/data by RE practitioners in the study areas posed a challenge. Property transaction data were not adequately kept in a way for easier access and retrieval in many of the estate firms and agent offices. Consequently, there was a lack of data that spanned the study period in some of the sampled estate firms or agent offices. This data collection challenge was, however, overcome by the excess time spent retrieving the required data for this study to ensure that the findings appropriately answer the research questions. Practical implicationsInflation and GDP per capita have been found to be significant factors that influence residential RE investment performance in the study areas. Therefore, investors should pay attention to these identified macroeconomic factors for residential RE investment in the study areas whilst making investment decisions in order to mitigate a possible loss of income or return. The government should formulate and implement economic policies that would address the current high unemployment and inflation rates in Nigeria at large.Originality/valueThis study has extended and further enriched the existing body of knowledge in the field of RE investment analysis in Nigeria. To the best of the authors' knowledge, this study is the first to adopt the Cornish Fisher value-at-risk and modified Sharpe ratio models to analyse risk and risk-adjusted returns on residential RE investment, respectively, in Nigeria. It has therefore redirected the focus of RE researchers and practitioners to a more objective approach to RE investment performance analysis in Nigeria.

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.

Beyond luck: The key to profitable residential real estate investments for individual investors in Türkiye

Individual residential investors are influenced by the media and their environment in their investment preferences, as they lack the experience of property investors and professional residential investors. Concerns about regret, fears of further property price rises and social circumstances put pressure on investors. Under these conditions, are individual housing investors seeing all the opportunities in the housing market? What types of buyers are taking advantage of these opportunities? This study aims to create tools to help individual residential investors identify opportunity periods in the market, analyse such opportunities retrospectively and test consumer behaviours in response to these opportunities. We analysed the opportunity for access to housing, the opportunity of lower loan interest rates and the opportunity of lower housing prices in Türkiye in the 120 months between 2013 and 2022 using the income-housing price scale. We analysed residential sales (total, credit and cash) in the opportunity periods resulting from the equations set up for the opportunity periods. We tested the criteria for selecting opportunity periods using the analysis of variation (ANOVA) method. We analysed changes in consumer preferences for credit and cash home purchases during periods of opportunity. We found that residential investors did not use the opportunity of accessing residential properties, and that cash home buyers used the opportunities of residential loan interest rates and residential price declines. We analysed changes in consumer preferences for credit and cash home purchases during periods of opportunity. We found that residential investors did not use the opportunity of accessing residential properties, and that cash home buyers used the opportunities of residential loan interest rates and residential price declines.

Factors Affecting Residential Real Estate Investments of U.S. Individuals

This paper aims to study the causal relationships between earnings, age, number of kids, and education level of U.S. individuals in residential real estate investments. This empirical study analyzes a total of 421,911 observations based on the interview of indi- viduals from the Survey of Income and Program Participation (SIPP). By employing the econometric techniques of binomial logit and probit models, multinomial logit model, and Tobit model on censored data, the results showed that most individuals in the U.S. are willing to invest in real estate. Interestingly, as the education level increases, people tend not to invest in real estate. However, with the increase in earnings, the number of kids, and age, people are more likely to invest in real estate.

In Real Estate Investment We Trust: State De-risking and the Ownership of Listed US and German Residential Real Estate Investment Trusts

Real estate investment trusts (REITs) have been around since 1960 but have only become major players in housing markets in the last twenty years. The current and ongoing wave of residential REIT (R-REIT) expansion has attracted significant scholarly and broader public interest. This article examines how real estate, finance, and the state are configured in relation to each other through R-REITs. While much of the housing financialization literature has focused on the real estate/state axis of this relationship, we explore the underexamined connections between the real estate/finance axis and the finance/state axis of the real estate–finance–state triangle. We analyze the financial accounts of the world’s fifteen largest publicly traded R-REITs and R-REIT–like funds in the two largest markets: the United States and Germany. Our findings demonstrate how the ownership of R-REIT stock is remarkably homogeneous: the largest shareholders in each of the studied R-REITs are the three largest index exchange-traded funds, which are heavily backed by pension fund capital. For these investors, it is important that R-REITs provide a healthy return on investment at the lowest possible risk. The investors require the state, in its various guises, to guarantee attractive risk-adjusted returns on R-REITs investments. We identify six dimensions of state de-risking in this context, deepening our understanding of the role of the state in housing financialization. It is the state that creates the trust in real estate investment trusts, and it thus is what generates the investment in real estate investment trusts.

СУЧАСНИЙ СТАН ІВЕСТИЦІЙНОГО ЗАБЕЗПЕЧЕННЯ БУДІВНИЦТВА ЖИТЛА В УКРАЇНІ

The issue of providing the population of Ukraine with housing is an important task of socio-economic policy and the implementation of housing and social development programs of the country. Solving this problem is impossible without sufficient investment support in the housing construction sector and the creation of an attractive investment climate for capital owners. The socio-economic effect of investing in the construction of residential real estate for national economies is investigated in the article. The essence of the investment process and its main features in the field of housing construction were also investigated. The set of qualitative characteristics of investment in residential real estate was defined here. The structure of interests of potential investors in the industry by relevant objects and types of assets is evaluated. An analysis of the volume, structure and dynamics of investment flows in the field of housing construction in terms of investment provision by types of economic activity in Ukraine was carried out. The conducted assessment showed a small share of the volume of investments in housing construction in all sectors of the national economy – no more than 9%. The analysis of the size and structure of investment provision in the construction industry showed that the peak volumes of capital investments in the construction of residential real estate objects took place during 2018–2019. Their share was about 69%. The growth of investment flows in housing construction has caused an increase in the number of residential objects put into operation in all their types (apartment buildings, single-apartment buildings, dormitories). The positions of Ukraine in the world rankings of the investment attractiveness of the national economy have been evaluated. The key trends of the investment attractiveness of the world market of residential real estate are investigated. The investment attractiveness of domestic primary and secondary housing markets is analyzed. The creation of joint real estate investment funds, institutional support for the creation of crowdfunding online platforms, investment digital platforms, development and implementation of "green" housing construction standards are proposed as the main tools for increasing the investment attractiveness of housing construction.

Uticaj finansijskih pokazatelja na likvidnost - empirijska analiza profitabilnosti, leveridža i dobi fonda

Financial leverage, profitability, and liquidity are crucial metrics used to evaluate the financial health and stability of a firm. This study aims to investigate the relationship between leverage ratios (debt-to-equity and debt-to-asset), profitability ratio( ROE), Fund Age and liquidity ratios (cash ratio and quick ratio) for Residential Real Estate Investment Trusts (REITs) listed on the New York Stock Exchange (NYSE) over the period of 2009-2021. A multiple linear regression analysis was conducted to model the relationship between the independent variables and the dependent variables. The findings suggest that ROE has a significant positive relationship with liquidity ratios, while Debt to Equity and Fund Age have a significant negative relationship. Debt to Assets is found to be not statistically significant in explaining liquidity, further highlighting the complex nature of the relationship between financial metrics and the financial stability of a firm.

The Effect of Short-Term Rentals on Residential Investment

We provide new evidence that short-term rental platforms like Airbnb incentivize residential real estate investment.

Optimization of United States Residential Real Estate Investment through Geospatial Analysis and Market Timing.

In this study, we examined the long-term spatial patterns and trends of home values within the United States from 1996 to 2019. The Zillow Home Value Index (ZHVI) data were obtained from the Zillow’s housing data portal. The overall trends indicated both coasts of the United States having the highest concentration of hotspots. The ideal time to sell varied seasonally across the country. We used geo-statistical analysis techniques, such as cluster analysis and emerging hot spot analysis (EHSA), to reveal the average and long-term trends in spatial patterns of home values. Washington was the only state with sporadic hot spots. The Western United States showed consecutive hotspots, most notably in California, but in surrounding states as well. The Northeast, Mid-Atlantic, and Florida were dominated by oscillating hotspots. Texas and the Southeast display new hotspots that signal change, indicative of southward migration of population. Finally, the Midwest has been a historical cold spot, but Cleveland has improved to a diminishing cold spot, pointing to the revitalization of the region. The seasonal level analysis displayed southern and coastal states as those benefiting most from winter home sales, and the colder northern states captured the most value and sold quicker in the summer months. This intuitive analysis of the country’s variation in ideal sale month reveals a local view of when to sell rather than a generalized view of the entire United States.

Conceptualising ‘residential investment’: separating the inseparable in asset-based economies

The growth in residential real estate investment internationally since 2008 has led to an explosion of research on residential investment, across economics, sociology, housing and urban studies, geography and planning. But there remains an underlying question of what exactly is meant when we talk about ‘residential investment’. This paper analyses the way that ‘residential investment’ is used as an analytical category within different theoretical approaches to mean slightly different things, with different implications for policymakers. Further to this, we show how these different conceptualisations of investment are related to one another, in the case of the UK. The paper uses empirical material drawn from archive research on the development of the UK housing system to reflect on the vast literature on financing, financialising and investing in residential real estate. This paper makes two key contributions. Theoretically, it clarifies and questions the conceptual divisions created between different forms of residential investment. Methodologically, we demonstrate the benefits of a historical approach, which we argue reveals the path dependent nature of residential investment processes and practices.

Особенности частного инвестирования в объекты жилой недвижимости в России

The paper aims to identify problems associated with the assessment of residential real estate for pri-vate investors, as well as to define and characterize a private investor. A decision-making algorithm for private investors in residential real estate is presented, which allows individual characteristics of the investor to be taken into account. With the help of this algorithm, private investors can independently assess residential real estate for personal purposes. The proposed algorithm provides the basis for building a financial model of private investment in residential real estate. The study tested this algo-rithm, presenting a specific example of residential real estate assessment for investment purposes. The calculation results show the effectiveness of the proposed procedure in understanding investors’ interests in the residential real estate market. Moreover, the presented procedure can be easily digit-ized, thus allowing an unqualified private investor to use it as a practical guide in the assessment of residential real estate investment properties. In digital form, the proposed algorithm can be used as a smartphone application.

Appraisal of Residential Real Estate Investment Diversification Prospects in South-South, Nigeria

The study examined the diversification prospects of residential real estate investments in South-South, Nigeria. Data on residential real estate investment returns were obtained from 132 Estate Surveying and Valuation firms practicing in the region. 132 copies of questionnaire were used to obtain the primary data. The study covered the period between 2005 and 2019. Pearson Correlation was used in analyzing the relationship between residential real estate returns by property types across the region. The result revealed that a portfolio can be well diversified by combination of 5-bedroom maisonettes in Uyo and 5-bedroom maisonettes in Port Harcourt into one portfolio as they have a negative correlation. Also investing in 5-bedroom maisonettes in Uyo and 3-bedroom bungalows in Port Harcourt can produce a well-diversified portfolio as they have a negative correlation. This supports the conclusion that diversification by property types across places is better than diversification by property types within a place. It was recommended that investors should consider investing in different classes of residential properties across the region. This will help reduce their investment portfolio risk while maximizing their portfolio returns. Keywords: Diversification, residential, real estate, investment, returns DOI: 10.7176/EJBM/13-24-09 Publication date: December 31 st 2021

Performance of commercial and residential real estate investments in Ibadan property market, Nigeria

PurposeThis study examined the performance of commercial and residential real estate investments in the Ibadan property market to provide information for investment decisions.Design/methodology/approachThe study used a mixed research design (qualitative and quantitative). Data were obtained employing in-depth interviews with randomly selected sixteen estate surveyors and valuers practising in the Ibadan property market. Data for the study were analysed using the phenomenological thematic content analysis. Similarly, data on rental and capital values were translated to income, capital and holding period returns. The Kwiatkowski–Phillips–Schmidt–Shin (KPSS) and Philip–Perron (PP) models were used for unit root analysis. Ordinary least square (OLS) regression model was used to test for inflation-hedging characteristics, and the Granger causality tests were carried out to analyse the causal relationship between the variables.FindingsThe study revealed that the Ibadan property market is still immature. For the return components, the study found that the Ibadan property market provided mean holding period returns of 10.82%, 14.31 and 8.29% for office, shop and residential property types, respectively. The study also revealed that the selected property types are perverse hedges against inflation. Similarly, the study showed a unidirectional causal relationship between inflation and returns on the selected property types.Practical implicationsResults of this study revealed the peculiar nature of the Ibadan property market; findings from the survey can be used as a guide for investment decisions by foreign and domestic investors. Shrewd investors can take advantage of the high returns provided by the real estate assets in the Ibadan property market (by investing in the property market) to obtain high returns and expand their investment portfolio.Originality/valueThis study is the first to examine, in an eclectic and comparative context, the performance of commercial and residential properties in the Ibadan property market from the perspective of its market maturity level, returns profile, as well as its inflation-hedging characteristics. Findings from the study will equip both individual and institutional investors with valuable information for investment decisions.

MEASURING PERFORMANCE OF RISK-RETURN IN RESIDENTIAL AND COMMERCIAL REAL ESTATE INVESTMENTS IN SOUTH-SOUTH, NIGERIA

The study measures the risk-return performance of residential and commercial real estate investments in South-South, Nigeria from 2009 to 2018. The study adopted the survey research design and purposive sampling technique was used to select estate surveying and valuation firms. Data was analysed using mean total returns, standard deviation and analysis of variance. The test of the first hypothesis indicates that residential real estate investment in Port Harcourt has the highest mean total return and performed better than Calabar and Uyo and implies that total returns of residential real estate investments are significantly different in the study area. For commercial property, Uyo outperformed that of Calabar and Port Harcourt in terms of return. The second hypothesis results indicate that location of property is a significant determinant of risk. The result shows that the mean risk in Port Harcourt for residential real estate investment is significantly different from the risk in Calabar and Uyo. This implies that there is significant difference between risks of residential properties in the study area. For commercial property investment risk, the result shows the risks of investment in offices are higher than shops. For location, Uyo commercial properties produced the highest risk.

Ways to Improve the Performance of Investments in Real Estate for Individual Investors

The article discusses approaches to the problem of improving the performance of investments in real estate for individual investors, who are relevant for many countries, including Russia. The advantages and disadvantages of real estate as an investment object are analyzed; simple criteria characterizing the performance of real estate investments are defined. The possibilities of using various strategies for real estate investments in the market economy have been analyzed. The features of the Russian taxation system, which improve the performance of residential real estate investments for individual investors, are observed. The main ways to improve performance of residential real estate investments are considered. Statistical data and calculations confirming the relevance of the above methods of improving efficiency are presented. It is pointed out that there is a relationship between some measures of the state regulation of the economy and the performance of investments in real estate.

Chinese property developers after the decline in foreign real estate investment in Sydney, Australia

This study investigates how Chinese developers responded to the changing patterns of investment in residential real estate in Sydney since 2010. The analysis also outlines the key lessons for cities around the world with high levels of Chinese foreign buyers and developers, which may experience a similar foreign real estate investment decline as a result of changing dynamics in domestic real estate markets, changes in China, and/or wider changes in the global economy or other key global events. Unlike Chinese individual foreign real estate investors who largely exited the real estate market after 2017, Chinese property developers remained committed to the domestic market in Australia. As such, this analysis is framed by a period of individual foreign capital withdrawal and is focused on foreign developers rather than individual foreign real estate investors. The paper argues that focusing on the actions of foreign developers in a domestic real estate market is important because the organisational structure and business practices of foreign developers can be vastly different to those of domestic developers. The analysis shows that since 2017 Chinese developers responded in two ways to the changing residential real estate market in Sydney: (1) they revised their sales strategies to target different customer groups; and/or (2) they changed their building practices.

Private investment in residential real estate viewed through personal behavioral traits of the agent: Evidence from St. Petersburg

Subject. Professional training of decision-makers influences investment decision private or individual investors make. Decisions on real estate investment are subject to biased consumer preferences resulting from investment or consumer interests. Hence, choosing a residential real estate item to purchase/rent, future buyers have their own psychological and emotional opinion on values. Objectives. I provide my own interpretation of residential real estate appraised by the private investor, considering their psychological and emotional traits. Methods. I applied general scientific and special methods of research to study the residential real estate appraisal, such as the retrospective, systems and functional-structural analysis, observation, classification, instrumental techniques for grouping, sampling, comparison and generalization, evolutionary and dynamic analysis, surveys and sorting out of the findings. Results. Private investors make choices, referring to their own personal trains, such as behavior, personal beliefs and values. I suggest considering the market segmentation on the basis of value-based method and evaluating the given segment. I tested the technique, referring to the Saint-Petersburg market of real estate. Various social groups of private investors were found to choose different residential properties and have different priorities in choosing an apartment for purchase or rent. They have greater expectations about the quality of rented housing than a residential property item to be purchased for their own use. Conclusions and Relevance. I investigated the relationship of investors’ behavior and investment lucrativeness of a residential property item. I discovered key aspects of lucrativeness for investors and provide guidelines for coordination of investors’ choices in line with their personal preferences.

The Effect of Short-Term Rentals on Residential Investment

We provide new evidence that short-term rental (STR) platforms like Airbnb incentivize residential real estate investment. We exploit two complementary identification strategies. First, we use variation in the timing of STR regulations to estimate the effect of regulation on both Airbnb listings and residential permits. We find that over the first 12 months following the start of the regulation, STR regulations reduce Airbnb listings by 12.6% and residential permits by 13.8%. We estimate an elasticity of permits with respect to Airbnb listings of 0.832. Second, we show that residential permits decline discontinuously across jurisdictional boundaries in which one side of the boundary has a STR regulation and the other side does not. The effect is especially pronounced for accessory dwelling units, which decline by 16.5% across regulatory boundaries. Our results imply that STRs incentivize residential investment, and especially so for housing units that are well suited for short-term renting.