The Rate of Return on Real Estate: Long-Run Micro-Level Evidence

David Chambers, Christophe Spaenjers and Eva Steiner

No 15657, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Real estate—housing in particular—is a less profitable investment in the long run than previously thought. We hand-collect property-level financial data for the institutional real estate portfolios of four large Oxbridge colleges over the period 1901–1983. Gross income yields initially fluctuate around 5%, but then trend downward (upward) for agricultural and residential (commercial) real estate. Long-term real income growth rates are close to zero for all property types. Our findings imply annualized real total returns, net of costs, ranging from approximately 2.3% for residential to 4.5% for agricultural real estate.

Keywords: Real estate; Income growth; Income yields; Property prices; Long-run returns (search for similar items in EconPapers)
JEL-codes: G11 G23 N20 R30 (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-cwa, nep-his and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Working Paper: The Rate of Return on Real Estate: Long-Run Micro-Level Evidence (2020)
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