Does Real Estate Defy Gravity? An Analysis of Foreign Real Estate Investment Flows

25 Pages Posted: 5 Oct 2016

See all articles by Patrick M. McAllister

Patrick M. McAllister

University of Reading - Department of Real Estate and Planning

Anupam Nanda

University of Reading - Real Estate Finance

Date Written: November 2016

Abstract

This paper investigates the scale and determinants of foreign investment flows between national real estate markets. Using data for over 100 countries over 2007–2012, the results indicate that, consistent with previous studies for trade, foreign direct and portfolio investment variables such as size and distance have significant effects on foreign real estate investment flows. Large positive size effects are consistent with a combination of scale economies and information externalities producing investment concentration across markets and in conjunction with direct and indirect transaction costs specific to real estate markets. Physical distance coefficients are relatively small compared to the studies of FDI.

Suggested Citation

McAllister, Patrick M. and Nanda, Anupam, Does Real Estate Defy Gravity? An Analysis of Foreign Real Estate Investment Flows (November 2016). Review of International Economics, Vol. 24, Issue 5, pp. 924-948, 2016, Available at SSRN: https://ssrn.com/abstract=2847981 or http://dx.doi.org/10.1111/roie.12228

Patrick M. McAllister

University of Reading - Department of Real Estate and Planning ( email )

Reading RG6 6AW
United Kingdom

Anupam Nanda (Contact Author)

University of Reading - Real Estate Finance ( email )

United States

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