Determinants of foreign and domestic non-listed real estate fund flows in India

Abstract

PurposeReal estate forms an important part of any economy and the investment in real estate, in turn, is impacted by the macroeconomic environment of that country. The purpose of the present research is to examine macroeconomic determinants of foreign and domestic non-listed real estate fund (NREF) flows and to examine whether they are similar or different for an emerging economy like India.Design/methodology/approachThe long and short-run cointegration between the time-series variables is estimated using the autoregressive distributed lag (ARDL) bounds test and error correction model (ECM) using quarterly data across the 2005–2017 period. ARDL is a suitable method for short time-series data.FindingsThe empirical results indicate that domestic NREF flows are positively and significantly impacted by real GDP and performance of listed real estate stocks (i.e. BSE realty index). Whereas, foreign NREF flows are positively and significantly impacted by the exchange rate, performance of listed real estate stocks and domestic NREF flows.Practical implicationsThe empirical results have significant implications for academicians, policy makers and real estate market practitioners. In the context of these results, some interesting insights are gained that would help in the implementation of the policies aimed toward increasing the fund flows in the real estate sector, which in turn would have a significant trickle-down effect on the Indian economy.Originality/valueThe existing literature looks at macroeconomic and other drivers of foreign investment in international real estate investments. However, there are very few studies on the determinants of domestic real estate investment flows and on determinants of NREFs' investment flows; particularly in emerging markets. The present study, in contrast, evaluates simultaneously the macroeconomic determinants of the domestic and foreign NREFs' investment flows in India. The ARDL and ECM method used has been applied for the first time to the study of NREFs.

Interdependence between foreigner housing acquisitions and housing price increase in Turkey during the COVID-19 pandemic era

“…Turkey's emphasis on increasing housing prices needs immediate policy attention to mitigate the potential future effects. The continuous increase in HAF in Turkey during the COVID-19 pandemic made this finding contrary to the conclusion made in the study by Gupta et al (2020) that foreign investment was subdued during the 2008 global financial crisis.…”

Influence of the global environment on capital flows in the London Office market

“…Furthermore, the empirical analysis could also be extended to other global cities to decipher the influence of international relative to domestic drivers in other markets. 2013), Li and Chen (2015), Poon (2017), Zhu and Lizieri (2020), Gupta et al (2020) Exchange rate Liow et al (2006), Hoesli et al (2004, Newell and Lee (2017), Zhu and Lizieri (2020) (Pesaran et al, 2001). The optimal lag for the model is selected using the Akaike information criterion.…”

“…The London office market has uniquely been a top destination of global cross-border capital over the last two decades and possesses crucial socio-economic and institutional attributes that enhance its competitiveness in attracting capital flows. Previous studies on real estate capital flows highlight the influence of factors such as overall economic growth and conditions, institutional and legal barriers, real estate market performance, liquidity and transparency, the exchange rate, interest rates, market size, investment location, information cost on real estate investment activities and capital flows (McGreal et al ,2001;Chin et al, 2006;Pi-Ying Lai and Fischer, 2007;Lieser and Groh, 2014;Fuerst et al,2015;McAllister and Nanda, 2016 and Baum, 2016;Devaney et al, 2017a;Devaney et al, 2017b;Poon, 2017;Gupta et al, 2020). Indeed, extant literature on factors underpinning capital market flows generally highlights the impact of either the domestic (pull) or global (push) factors on different types and waves of international capital flows.…”

The Performance and Diversification Potential of Non-Listed Value-Add Real Estate Funds in Japan

“…Whilst Mansley et al (2020) considered style classifications for non-listed real estate funds across Asia, there is limited country-specific research in the literature for non-listed real estate funds in Asia. For China's non-listed real estate funds, superior risk-adjusted performance and enhanced diversification benefits of non-listed real estate funds were observed (Cho 2018), while Gupta and Newell (2021) and Gupta et al (2018Gupta et al ( , 2020 considered the risk factors and capital flows to India's non-listed real estate funds, but with no supporting empirical performance analysis.…”