Cross-Border Capital Flows into Real Estate

41 Pages Posted: 10 Nov 2013 Last revised: 17 Apr 2014

See all articles by Franz Fuerst

Franz Fuerst

University of Cambridge - Department of Land Economy; University of Melbourne; City University of New York - Center for Urban Research

Stanimira Milcheva

University College London

Andrew Baum

University of Oxford, Said Business School

Date Written: November 8, 2013

Abstract

This study investigates the determinants of cross-border capital flows into direct real estate markets. In particular, it investigates how existing institutional, regulatory and real estate specific barriers affect cross-border real estate inflows and outflows in a sample of 24 developed and emerging countries, and whether investors seek out targets with lower barriers and regulatory arbitrage. We do not find evidence of significant cross-border institutional or regulatory arbitrage in the real estate market. However, real estate market liquidity is found to be the most important driver of cross-border flows. While many of the institutional barriers included in this analysis do not appear to impact the level of real estate inflows significantly, their presence tends to suppress real estate capital outflows to other countries. Overall, easy access to financial markets, a good economic environment and transparent real estate markets may enhance real estate outflows, while returns and the macroeconomy are found to enhance domestic real estate investment.

Keywords: Real Estate Investment, Cross-border flows, Panel data analysis

JEL Classification: F14, O19, R12, C31

Suggested Citation

Fuerst, Franz and Milcheva, Stanimira and Baum, Andrew, Cross-Border Capital Flows into Real Estate (November 8, 2013). Available at SSRN: https://ssrn.com/abstract=2352073 or http://dx.doi.org/10.2139/ssrn.2352073

Franz Fuerst (Contact Author)

University of Cambridge - Department of Land Economy ( email )

19 Silver Street
Cambridge, CB3 9EP
United Kingdom

HOME PAGE: http://www.landecon.cam.ac.uk/directory/dr-franz-fuerst

University of Melbourne ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

City University of New York - Center for Urban Research

CUNY The Graduate Center
New York, NY 10011
United States

Stanimira Milcheva

University College London ( email )

1-19 Torrington Place
Department of Construction and Project Management
London, London WC1E 7HB
United Kingdom

Andrew Baum

University of Oxford, Said Business School ( email )

Park End Street
Oxford, OX1 1HP
United Kingdom

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