Only the Best? Exploring Cross-Border Investor Preferences in US Gateway Cities

Journal of Real Estate Finance and Economics, October 2019, Volume 59, Issue 3, pp 490–513

Posted: 5 Dec 2019

See all articles by Steven Devaney

Steven Devaney

affiliation not provided to SSRN

David Scofield

University of Aberdeen - Department of Accountancy, Finance and Real Estate

Melanie Zhang

affiliation not provided to SSRN

Date Written: October 20, 2019

Abstract

Despite heady growth in cross-border investment into commercial real estate over recent decades, there are few studies that examine differences in investment preferences between domestic and cross-border investors at a micro level. We address the gap by examining the characteristics of assets acquired by cross border investors in six major US metro areas, comparing them with the purchases made by US investors in those same areas. Our study uses date on more than 67 500 transactions recorded by Real Capital Analytics (RCA) over the period from Q1 2003 to Q3 2016. As well as examining cross-border investors in aggregate, we isolate and examine purchases by investors from each of the four principal source nations for cross-border real estate investment in these cities. This is importance since \treating cross-border investors as a single group may obscure important differences between them. We employ multilevel logit techniques and we find across a number of specifications that cross-border investors prefer larger assets, newer assets and CBD locations regardless of nationality. However, temporal and sectoral patterns of investment, as well as evidence for return chasing behavior, vary with the nationality of investors being studied.

Keywords: Commercial real estate; Cross-border investment; Foreign investment; Investor preferences; Multilevel modelling; Return chasing behavior

Suggested Citation

Devaney, Steven and Scofield, David and Zhang, Melanie, Only the Best? Exploring Cross-Border Investor Preferences in US Gateway Cities (October 20, 2019). Journal of Real Estate Finance and Economics, October 2019, Volume 59, Issue 3, pp 490–513, Available at SSRN: https://ssrn.com/abstract=3490882

Steven Devaney (Contact Author)

affiliation not provided to SSRN

David Scofield

University of Aberdeen - Department of Accountancy, Finance and Real Estate ( email )

Dunbar Street
Aberdeen, AB24 3QY
United Kingdom

Melanie Zhang

affiliation not provided to SSRN

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