Determinants of transaction activity in commercial real estate markets: evidence from European and Asia-Pacific countries

Devaney, Steven; McAllister, Pat; Nanda, Anupam

doi:10.1080/09599916.2017.1383931

Cited by 8 publications

(16 citation statements)

References 26 publications

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“…Meanwhile, the size variable is not in line with expectations as there is a significant negative coefficient for this variable. This result is also in line with the findings of Devaney et al (2017b). It is supportive of the argument that large, core cities have less transaction activity relative to their size which, whilst empirically unproven, has been explained as due to the increased propensity of core assets in core locations to be held longer within investment portfolios.…”

Section: Insert Table 3 Around Heresupporting

confidence: 87%

“…The coefficient for this variable is negative in all the models, albeit it is not significant in models 6 and 8. As expected, the more risky a country's government bonds are perceived to be relative to US bonds, the lower is the level of transaction activity, which is in line with the findings of Devaney et al (2017b) for a sample of European and Asia-Pacific real estate markets. There is no consistent statistically significant result for the debt flow variable.…”

Section: Insert Table 3 Around Heresupporting

confidence: 86%

“…Another issue is the omission of any variables relating to real estate market conditions in the countries concerned. Devaney, McAllister and Nanda (2017b) examined the determinants of transaction activity in 38 national markets in Europe and Asia-Pacific over the period 2000-14 at the all property level and for the office sector. They found that the size and wealth of a country, the risk associated with that country and the performance of its commercial real estate market are significant factors that explain the level of transaction activity.…”

Section: Background and Contextmentioning

confidence: 99%

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Capitalization rates and transaction activity in international office markets: A global perspective

Devaney

Livingstone²,

McAllister

et al. 2019

Global Finance Journal

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Based on a sample of office markets in 33 cities across 16 countries for the period 2007-2015, this paper explores variations in commercial real estate transaction activity and asset pricing in international office markets. It is argued that there are complex interactions and feedback relationships between asset prices, transaction activity, market conditions and local institutional structures in real estate markets. Commercial real estate pricing is modelled using data on capitalization rates. The relationships found are consistent with previous research in terms of the importance of drivers such as government bond yields, yield spreads and real estate rents. Consistent with information network effects, it is also found that larger and more mature markets tend to have lower cap rates and, thus, higher asset prices. The results for transaction activity are less clear cut. Results from econometric analysis of turnover rates suggest that the same explanatory factors do not determine transaction activity to the same extent as cap rates. When purged of possible joint determinants, there is no evidence to support the view that cap rates affect market turnover rates or that turnover rates affect cap rates.

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Section: Insert Table 3 Around Heresupporting

confidence: 87%

Section: Insert Table 3 Around Heresupporting

confidence: 86%

Section: Background and Contextmentioning

confidence: 99%

See 1 more Smart Citation

Capitalization rates and transaction activity in international office markets: A global perspective

Devaney

Livingstone²,

McAllister

et al. 2019

Global Finance Journal

Self Cite

View full text Add to dashboard Cite

show abstract

“…After investigating 47 countries, they illustrated a significant relationship between foreign real estate investment activity as the dependent variable and real estate investment opportunities, the depth and sophistication of capital markets, investor protection and the legal framework, administrative burdens and regulatory limitations as independent variables. In line with this study, Devaney et al (2017a) found that in European and Asian Pacific countries, the size and wealth of a country, the specific country risk and property rights, as well as the performance of the real estate markets, mainly determine transaction activity [1].…”

Section: Related Literature and Hypotheses Derivationmentioning

confidence: 81%

“…Thus, relative attractiveness appears to be a potential driver, but solely for geographical reasons. At the same time, as outlined by Devaney et al (2017a), data availability issues in Europe especially at the city level have hampered research on cross-border transaction activity. Consequently, work at this level requires new empirical evidence.…”

Section: Introductionmentioning

confidence: 99%

Do cross-border investors benchmark commercial real estate markets?

Oertel

Willwersch

Cajias³

2020

JERER

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Purpose The purpose of this study is to introduce a new perspective on determinants of cross-border investments in commercial real estate, namely, the relative attractiveness of a target market. So far, the literature has analyzed only absolute measures of investment attractiveness as determinants of cross-border investment flows. Design/methodology/approach The empirical study uses a classic ordinary least squares estimation for a European panel data set containing 28 cities in 18 countries, with quarterly observations from Q1/2008 to Q3/2018. After controlling for empirically proven explanatory covariates, the model is extended by the new relative measurement based on relative yields/cap rates and relative risk premia. Additionally, the study applies a generalized additive mixed model (GAMM) to investigate a potentially nonlinear relationship. Findings The study finds on average a ceteris paribus, statistically significant lagged influence of the proxy for relative attractiveness. Nonetheless, a differentiation is needed; relative risk premia are statistically significant, whereas relative yields are not. Moreover, the GAMM confirms a nonlinear relationship for relative risk premia and cross-border transaction volumes. Practical implications The results are of interest for both academia and market participants as a means of explaining cross-border capital flows. The existing knowledge on determinants is expanded by relative market attractiveness, as well as an awareness of nonlinear relationships. Both insights help to comprehend the underlying transaction dynamics in commercial real estate markets. Originality/value Whereas the existing body of literature focuses on absolute attractiveness to explain cross-border transaction activity, this study introduces relative attractiveness as an explanatory variable.

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Is e-commerce an investment risk priced by retail real estate investors? An investigation

Kaiser

Freybote

2021

Journal of Property Research

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Determinants of transaction activity in commercial real estate markets: evidence from European and Asia-Pacific countries

Cited by 8 publications

References 26 publications

Capitalization rates and transaction activity in international office markets: A global perspective

Capitalization rates and transaction activity in international office markets: A global perspective

Do cross-border investors benchmark commercial real estate markets?

Is e-commerce an investment risk priced by retail real estate investors? An investigation

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