Abstract/Summary

There are different perceptions of what liquidity means when analysing real estate markets. The application of financial market concepts of liquidity to real estate markets has been criticised for failing to consider the operational nature of real estate markets. Research on real estate market liquidity has embraced time on market as an alternative approach to understanding liquidity. However, variance analysis of time on market fall short of explaining explicit processes in which real estate transactions are embedded. This research has focused on analysing components of transaction processes which could explain time on market. This research explored time on market from a process perspective to understand the fundamental essence of real estate market liquidity in a way that captured the market’s operational nature. Within this sphere, previous studies investigated the institutional and performance (calculative agencies) attributes. This research focused on social attribute embedded in commercial real estate sale transactions. The literature review, hence, covered the nature of real estate markets, search, and social network concepts to understand how involving brokers in searching could be associated with time on market in commercial investment real estate transactions. The research question for this study was how egocentric uncertainty was associated with search in commercial investment real estate markets of Johannesburg, South Africa and London, United Kingdom identified as Alpha and Alpha++ global and world cities. Liquidity in global cities is contingent on how the processes by which the behaviour of intermediaries, the nature of social capital and the complexity of power relations generate capital flows. Qualitative approach and ethnomethodology were adopted to understand these socially constructed processes in commercial transactions. data collection involved interviewing 19 individuals in commercial real estate brokerage firms and investment fund management firms in both markets to establish replications and/or deviations in commercial real estate processes involving office sale transactions. Constructive theoretical thematic analysis was used to identify emerging themes. The analysis of contingencies to sale transaction processes provided insight into the operational nature of commercial real estate markets. Brokers in both markets appeared to exploit cognitive, organisational and social proximities within their social networks to resolve information asymmetry and potential opportunism. A broker’s perception of transaction demands and network resources seemed to influence search strategy choice. Informal social relations seemed to have been associated with the quality of accessible information to gain tacit knowledge in less sophisticated markets, and to gain market insight in more sophisticated markets. Further research is required to establish how social networks could influence the expedience of investment decisions or be associated with cultural embeddedness in transactions.