Determinants of Foreign versus Domestic Real Estate Investment: Property Level Evidence from Listed Real Estate Investment Firms

52 Pages Posted: 29 Jun 2014 Last revised: 10 Jan 2017

See all articles by Nathan Mauck

Nathan Mauck

University of Missouri - Kansas City

S. McKay Price

Lehigh University - Perella Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: August 25, 2015

Abstract

We examine the determinants of foreign real estate investment relative to the domestic case using the portfolios of a large sample of publicly traded real estate investment companies; where foreign investment is defined as the property owner headquarters being located in a different country than a given asset. The cross-sectional results provide strong evidence that real estate firms are more likely to take a smaller stake in larger assets when investing abroad. The penchant for large assets holds when controlling for economic activity, real estate investment opportunities, depth and sophistication of the capital markets, investor protection and the legal framework, administrative burdens and regulatory limitations, and the socio-cultural and political environment at both the property nation and headquarter nation levels. In general, foreign ownership is less likely with industrial, office, retail, and self-storage properties. Capital market development is consistently negatively related to foreign investment.

Keywords: Real Estate Investment; International Real Estate; International Finance; Foreign Investment

JEL Classification: F21; G11; G23; O16; O18; P52

Suggested Citation

Mauck, Nathan and Price, S. McKay, Determinants of Foreign versus Domestic Real Estate Investment: Property Level Evidence from Listed Real Estate Investment Firms (August 25, 2015). Journal of Real Estate Finance and Economics, Vol. 54, No. 1, pp. 17-57, 2017, Available at SSRN: https://ssrn.com/abstract=2460093 or http://dx.doi.org/10.2139/ssrn.2460093

Nathan Mauck

University of Missouri - Kansas City ( email )

5100 Rockhill Road
Kansas City, MO 64110-2499
United States

S. McKay Price (Contact Author)

Lehigh University - Perella Department of Finance ( email )

621 Taylor Street
Bethlehem, PA 18015
United States
610-758-4787 (Phone)

HOME PAGE: http://www.mckayprice.com

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