Proximity to COVID-19 Cases and Real Estate Equity Returns

46 Pages Posted: 2 Jul 2020 Last revised: 29 Oct 2020

See all articles by Lingshan Xie

Lingshan Xie

University College London

Stanimira Milcheva

University College London

Date Written: July 2, 2020

Abstract

This paper uses a difference-in-differences (DID) approach to identify the effect of proximity to COVID-19 cases on the returns of real estate firms. We use a novel micro-level dataset which combines extensive data on the geographic footprint of COVID-19 patients, i.e. the locations they have resided in or visited, and the location of property holdings of real estate firms in Hong Kong. We find significantly negative effects of proximity to COVID-19 cases on stock returns. Having a property within 2 miles from a COVID-19 case results in a 0.02% lower return one day after the case disclosure. This effect is stronger for properties located closer and is weaker if the property is a residential building.

Keywords: COVID-19, listed real estate firms, stock return, neighborhood risk, asset location, spatial analysis

JEL Classification: I10, G1, G14, D81, R30

Suggested Citation

Xie, Lingshan and Milcheva, Stanimira, Proximity to COVID-19 Cases and Real Estate Equity Returns (July 2, 2020). Available at SSRN: https://ssrn.com/abstract=3641268 or http://dx.doi.org/10.2139/ssrn.3641268

Lingshan Xie (Contact Author)

University College London ( email )

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

Stanimira Milcheva

University College London ( email )

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

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