The Attractiveness of 66 Countries for Institutional Real Estate Investments: A Composite Index Approach

Abstract

We address the attractiveness of 66 countries around the world for institutional real estate investments by constructing a composite index. For the index composition, we refer to the results of prior research on the parameters determining real estate investment activity on an aggregated country level. Our index reveals a country ranking that correlates reasonably well with commercial real estate investments, as we prove with back-tests over six years. We increase the transparency of market variables for decision-making in global real estate asset allocation and provide the key determinants that shape national real estate markets. The results highlight the strengths and weaknesses of developed, transition and emerging economies and provide guidelines for political improvements to attract international capital to spur real estate investment activity.

Keywords: Real Estate Investments, International Asset Allocation, Real Estate Market Attractiveness

JEL Classification: G11, G23, G24, O16, O18, P25, P52