Industrial Real Estate Investment: Does the Contrarian Strategy Work?

Posted: 6 Apr 2010

Date Written: April 5, 2010


The superiority of the contrarian investment strategy, though well attested to in the finance literature, has received scant attention, if any, in the real estate literature. This study uses empirical industrial real estate investment return data from 1985Q1 to 2005Q3 for the US, and some Asia Pacific cities in order to ascertain the relative superiority of "value" and growth" industrial real estate investments. The results show that "value" industrial property investment outperformed "growth" industrial property investment in all the holding periods under consideration. Furthermore the industrial property investments exhibit return reversal. This implies that the superiority of the contrarian strategy is sustainable. The results of stochastic dominance tests validate the relative superiority of "value" over "growth" industrial property investment. This implies the fund managers who traditionally have been favoring prime (i.e. growth) industrial property investment may have to reconsider their investment strategy if they want to maximize their return.

Keywords: Contrarian investment strategy, Value-growth spread, Value properties, Growth properties, Stochastic dominance, Means reversion

Suggested Citation

Addae-Dapaah, Kwame and Webb, James R. and Hin, Ho (David) Kim, Industrial Real Estate Investment: Does the Contrarian Strategy Work? (April 5, 2010). Journal of Real Estate Finance and Economics, Vol. 41, No. 2, 2010. Available at SSRN:

Kwame Addae-Dapaah (Contact Author)

Independent ( email )

No Address Available

James R. Webb

Cleveland State University ( email )

1860 E. 18th St., BU 327E
Cleveland, OH 44115
United States
216-687-4716 (Phone)
216-687-4716 (Fax)

Ho (David) Kim Hin

Independent ( email )

No Address Available

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