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Does foreign investment affect US office real estate prices?

McAllister, P. and Nanda, A. (2015) Does foreign investment affect US office real estate prices? Journal of Portfolio Management, 41 (6). pp. 38-47. ISSN 0095-4918

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To link to this item DOI: 10.3905/jpm.2015.41.6.038


his article examines the impact of foreign real estate investment on U.S. office market capitalization rates. The geographic unit of analysis is MSA and the time period is 2001–2013. Drawing upon a database of commercial real estate transactions, the authors model the determinants of market capitalization rates with a particular focus on the significance of the proportion of market transactions involving foreign investors. Employing several econometric techniques to analyze the data, the results suggest statistically significant effects of foreign investment across 38 U.S. metro areas. It is estimated that, all else equal, a 100 basis point increase in foreign share of total investment in a U.S. metropolitan office market causes about an 8 basis point decrease in the market cap rate.

Item Type:Article
Divisions:Henley Business School > Real Estate and Planning
ID Code:41539
Publisher:Euromoney Institutional Investor Plc

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