Which Factors Determine Cross-Border Real Estate Capital Flows? A Gravity Modelling Approach

26 Pages Posted: 30 Mar 2014

See all articles by Patrick McAllister

Patrick McAllister

University College London - Bartlett School of Planning

Anupam Nanda

University of Reading - School of Real Estate & Planning, Henley Business School

Date Written: March 28, 2014

Abstract

For the period 2007-12, this paper investigates the scale and determinants of cross-border investment flows between national real estate markets. The literature on the application of gravity models to international investment and previous research on cross-border real estate investment is reviewed. This is followed by a discussion of the data and empirical framework used to assess the determinants of cross-border real estate investment. A range of specifications for the gravity model are used to empirically estimate the models. The results indicate that, consistent with previous studies for trade, foreign direct and portfolio investment, variables such as size and distance have expected effects on cross-border real estate investment flows. The results are consistent with increased risk aversion in the period 2008-12 with variables associated with informational frictions becoming more significant.

Keywords: Real Estate Investment, Cross-border Flows, Gravity Model, Poisson Regression

Suggested Citation

McAllister, Patrick and Nanda, Anupam, Which Factors Determine Cross-Border Real Estate Capital Flows? A Gravity Modelling Approach (March 28, 2014). Available at SSRN: https://ssrn.com/abstract=2417559 or http://dx.doi.org/10.2139/ssrn.2417559

Patrick McAllister

University College London - Bartlett School of Planning ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Anupam Nanda (Contact Author)

University of Reading - School of Real Estate & Planning, Henley Business School ( email )

Whiteknights
Reading, Berkshire RG6 6AH
United Kingdom

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