Housing in the Greater Paris Area as an Inflation Hedge?

Yasmine Zouari and Aya Nasreddine ()
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Yasmine Zouari: Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School
Aya Nasreddine: CEROS - Centre d'Etudes et de Recherches sur les Organisations et la Stratégie - UPN - Université Paris Nanterre

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Abstract: In this article, we use the framework of inflation beta to test the capacity of physical residential real estate to hedge against inflation and its components, and compare it to the inflation hedge ability of various financial assets. Specifically, the housing asset is represented by the residential market in the communes of the "Grand Paris" metropolis with the different components of inflation. We start by analyzing the residential market in this area, its fundamentals, characteristics and dynamic. Then, applying the hierarchical clustering technique, we divide the Greater Paris area into five homogenous groups of communes and test its hedging ability using both correlation and regression analysis. Residential assets are confirmed to be a hedge against inflation, particularly against its unexpected component and thanks to its capital return rather than the rental return. On the other hand, the listed real estate does not provide the same hedging properties and thus cannot be considered as a substitute for this aim

Keywords: Direct housing; Grand Paris Metropolis; Hedging ability; Inflation; Direct housing "Grand Paris" metropolis listed real estate inflation hedging ability asset management; "Grand Paris" metropolis; listed real estate; inflation; hedging ability; asset management (search for similar items in EconPapers)
Date: 2023-07-12
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Published in 29th Annual European Real Estate Society Conference, ERES, Jul 2023, London, France. ⟨10.15396/eres2023_11⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04956272

DOI: 10.15396/eres2023_11

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