Macroeconomic Theory and the Implication for Real Estate Cycles
Keywords:
Abstract
The paper examines the implication of macroeconomic theory on real estate cycles. Certain macroeconomic factors such as increasing real interest rates, lack of credit availability and increasing product market competition as a result of higher rate of returns in the financial markets tend to dissuade real estate investments while favouring short term investors. It has been established that macroeconomic variables such as nominal interest rates explain almost 60% of the variation in real estate prices. Other macroeconomic variables such as the slope of the term structure, expected and unexpected inflation, industrial production, and the spread between high-grade and low-grade bonds act as a proxy for economic risk factors that are rewarded, ex ante, in the stock market. Hence a good understanding of macroeconomic theory and cyclical movement is a significant factor for efficient portfolio management and the resultant implication on investment decision making.
Downloads
- Article PDF
- TEI XML Kaleidoscope (download in zip)* (Beta by AI)
- Lens* NISO JATS XML (Beta by AI)
- HTML Kaleidoscope* (Beta by AI)
- DBK XML Kaleidoscope (download in zip)* (Beta by AI)
- LaTeX pdf Kaleidoscope* (Beta by AI)
- EPUB Kaleidoscope* (Beta by AI)
- MD Kaleidoscope* (Beta by AI)
- FO Kaleidoscope* (Beta by AI)
- BIB Kaleidoscope* (Beta by AI)
- LaTeX Kaleidoscope* (Beta by AI)
How to Cite
References
Alastair Adair, Jim Berry, Norman Hutchison, Stanley Mcgreal (2007) Attracting Institutional Investment into Regeneration: Necessary Conditions for Effective Funding Journal of Property Research. 24(3), 221-240. https://doi.org/10.1080/09599910701599282
A. Adair, J. Berry, W. McGreal (1994) Investment Decision Making: A Behavioural Perspective Journal of Property Finance. 5(4), 32-42.
M. Alkali, Ibrahim Sipan, I. Razali, M. (2018) An Overview of Macro-Economic Determinants of Real Estate Price in Nigeria International Journal of Engineering & Technology, 7 (3. 7, 484-488.
A. Baum, N. Grosby (2008) Property Investment Appraisal 3rd Ed.
Lee Chun-Chang, Liang Chih-Min, Chou Hsing-Jung (2009) Identifying Turning Points of Real Estate Cycles in Taiwan Journal of Real Estate Portfolio Management. 15(1), 75-85. https://doi.org/10.1080/10835547.2009.12089829
M. Cowley (2007) Property Market Forecast and their Valuation Implications; A study ofthe Brisbane Central Business District Office Market PhD thesis.
Firat Demir (2009) Capital Market Imperfections and Financialization of Real Sectors in Emerging Markets: Private Investment and Cash Flow Relationship Revisited World Development. 37(5), 953-964. https://doi.org/10.1016/j.worlddev.2008.09.003
S. Fifield, D. Power, C. Sinclair (2002) Macroeconomic Factors and Share Returns: An Analysis Using Emerging Market Data International Journal of Finance & Economics. 7(1), 51-62. https://doi.org/10.1002/ijfe.173
K. Ho, S. Ong, T. Sing (2006) Asset Allocation International Real Estate Investment Strategy under A Workable Analytic Hierarchy Process (AHP) Journal of Property Investment & Finance. 24(4), 324-342.
R. Ibbotson, H. Kaplan (2000) Does Asset‐Allocation Policy Explain 40 Percent, 90 Percent, or 100 Percent of Performance?. http://www.mangustarisk.it/doc/pdf/Does_Asset_Allocation_Explain_40_90_100_Performance.pdf
S. Lee (2004) Local Market Risk, in the Investment Property Forum (IPF) Handbook on International Real Estate.
B. Lindeiner, H. Eckermann (2009) Infrastructure-Defensive Portfolio Diversification Partners Group Research Flash.
K. Liow, H. Zhu (2007) Regime Switching and Asset Allocation Evidence from International Real Estate Security Markets Journal of Property Investment & Finance. 25(3), 274-288.
S. McGreal, A. Adair, J. Webb (2009) Optimal Diversification in U.S./U.K. Private Real Estate Only Portfolios: The Good, the Bad, and the Uncertain. 15(1), 87-93.
Stanley McGreal, James Webb, Alastair Adair, Jim Berry (2006) Risk and Diversification for Regeneration/Urban Renewal Properties: Evidence from the U.K. 12(1), 1-12. https://doi.org/10.1080/10835547.2006.12089736
G. Mueller (1995) Understanding real estate's physical & financial market cycles. 12(3), 51-64.
G. Newell, K. Chau, S. Wong (2009) The significance and Performance of Infrastructure In China Journal of Property Investment & Finance. 27(2), 180-202. https://doi.org/10.1108/14635780910937863
Stephen Pyhrr, Stephen Roulac, Waldo Born (1999) Real Estate Cycles and Their Strategic Implications for Investors and Portfolio Managers in the Global Economy. 18(1), 7-68. https://doi.org/10.1080/10835547.1999.12090986
Bertrand Renaud (1997) The 1985 to 1994 Global Real Estate Cycle: An Overview Journal of Real Estate Literature. 5(1), 13-44. https://doi.org/10.1080/10835547.1997.12090058
RICS (1994) Understanding the Property cycle: Main Report: Economic Cycles and Property Cycles: the Final Report of Research Undertaken by Investment Property Databank and the University of Aberdeen on behalf of The Royal Institution of Chartered Surveyors, May.
N. Rottke, M. Wernecke (2002) Real Estate Cycles in Germany-Causes, Empirical Analysis and Recommendations for the Management Decision Process. 21-23.
RREEF (2008) China infrastructure investment.
Thomson Reuters (2009) International Securitization Report =6. http://www.isr-e.com/section.asp?Navcode=6
Martin Wernecke, Nico Rottke, Christoph Holzmann (2004) Incorporating the Real Estate Cycle into Management Decisions - Evidence from Germany Journal of Real Estate Portfolio Management. 10(3), 171-186. https://doi.org/10.1080/10835547.2004.12089706
Patrick Wilson, John Okunev (1999) Spectral Analysis of Real Estate and Financial Assets Markets Journal of Property Investment & Finance. 17(1), 61-74. https://doi.org/10.1108/14635789910252909
Published
2019-08-27
Issue
Section
License
Copyright (c) 2019 Authors and Global Journals Private Limited
This work is licensed under a Creative Commons Attribution 4.0 International License.