Long-Term Benefits from Investing in International Real Estate

31 Pages Posted: 11 Jul 2009

See all articles by Felix Schindler

Felix Schindler

Steinbeis University Berlin - Center for Real Estate Studies; ZEW – Leibniz Centre for European Economic Research - International Finance and Financial Management

Date Written: 2009

Abstract

This paper analyses long- and short-term co-movements between 14 international real estate stock markets based on bivariate testing for cointegration and correlation analysis. The results indicate that there exist strong long-term relationships within economic and geographical regions, but less long-run linkages between real estate markets in different continents. Thus, investors would benefit from broadening their investment horizon from their domestic continent to Australia, Europe, and Northern America. Furthermore, it is shown that within each region there are one or two key markets influencing neighbouring markets like Australia in the Asia-Pacific region, the U.S. in the Anglo-Saxon area, and France and the Netherlands in the EMU. Therefore it is implied, from an investor’s point of view, that it should be sufficient to focus only on these central markets. With respect to the efficient market hypothesis, the findings by cointegration analysis put some further doubt on its validity for securitized real estate markets.

Keywords: Cointegration; Correlation Analysis; Diversification; Securitized Real Estate Markets

JEL Classification: C22, G11, G14

Suggested Citation

Schindler, Felix, Long-Term Benefits from Investing in International Real Estate (2009). ZEW - Centre for European Economic Research Discussion Paper No. 09-023. Available at SSRN: https://ssrn.com/abstract=1431881 or http://dx.doi.org/10.2139/ssrn.1431881

Felix Schindler (Contact Author)

Steinbeis University Berlin - Center for Real Estate Studies ( email )

Berlin
Germany

ZEW – Leibniz Centre for European Economic Research - International Finance and Financial Management ( email )

Postfach 103443
Mannheim, D-68034
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
405
Abstract Views
1,410
rank
71,375
PlumX Metrics