Which Factors Determine Cross-Border Real Estate Capital Flows? A Gravity Modelling Approach
26 Pages Posted: 30 Mar 2014
Date Written: March 28, 2014
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: Suggested Citation