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Do ‘foreigners’ pay more? The effects of investor type and nationality on office transaction prices in New York City

Devaney, S. and Scofield, D. (2017) Do ‘foreigners’ pay more? The effects of investor type and nationality on office transaction prices in New York City. Journal of Property Research, 34 (1). pp. 1-18. ISSN 1466-4453

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To link to this item DOI: 10.1080/09599916.2017.1299197


Are commercial real estate prices in metropolitan New York affected by the type or nationality of the investors involved in a transaction? Previous research has highlighted differences in pricing between in-state and out-of-state investors and between different types of investors, but there are few extant studies that consider the influence of nationality on pricing at a micro-level. Foreign investors might pay more than domestic investors for commercial real estate assets because of a lack of information or experience in the market concerned. However, they might use local partners or brokers to mitigate such problems. To explore these issues, we use data provided by Real Capital Analytics on over 3,000 office transactions in the New York metro area from 2001-2015. We use hedonic regression techniques and propensity score matching to examine whether pricing differs across investor groups after controlling for asset attributes. We find that foreign investors pay more than domestic investors at acquisition, but receive more when selling assets. Tests suggest that it is unmeasured aspects of quality that explain any apparent overpayment for offices in this location, not information issues.

Item Type:Article
Divisions:Henley Business School > Real Estate and Planning
ID Code:70112
Publisher Statement:The Version of Record of this manuscript has been published and is available in Journal of Property Research from 15/03/2017:


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