Institutional Capital Flows and Return Dynamics in Private Commercial Real Estate Markets

32 Pages Posted: 27 Apr 2009

See all articles by David C. Ling

David C. Ling

University of Florida - Warrington College of Business Administration

Andy Naranjo

University of Florida - Warrington College of Business Administration

Abstract

This article examines the short- and long-run dynamics among institutional capital flows and returns in private real estate markets. At the aggregate U.S. level, we find evidence that lagged institutional flows significantly influence subsequent returns. When disaggregating by property type at the national level, we find that capital flows predict subsequent returns in the apartment and office sectors, but not in the retail and industrial markets. At the metropolitan level, we find that the flows help explain subsequent returns in a limited number of core business statistical areas (CBSAs), although these CBSAs collectively represent about 30% of institutional capital. We find no evidence that institutional returns are predictive of future capital flows at the national or CBSA level, suggesting that institutional investors are not chasing returns.

Suggested Citation

Ling, David Curtis and Naranjo, Andy, Institutional Capital Flows and Return Dynamics in Private Commercial Real Estate Markets. Real Estate Economics, Vol. 37, Issue 1, pp. 85-116, Spring 2009, Available at SSRN: https://ssrn.com/abstract=1381638 or http://dx.doi.org/10.1111/j.1540-6229.2009.00236.x

David Curtis Ling

University of Florida - Warrington College of Business Administration ( email )

P.O. Box 117168
Gainesville, FL 32611
United States
352-392-9307 (Phone)
352-392-0301 (Fax)

Andy Naranjo

University of Florida - Warrington College of Business Administration ( email )

P.O. Box 117168
Gainesville, FL 32611-7168
United States
352-392-3781 (Phone)

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