Preferences of Institutional Investors in Commercial Real Estate

Dragana Cvijanović (), Stanimira Milcheva () and Alex Minne ()
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Dragana Cvijanović: Cornell University
Stanimira Milcheva: University College London
Alex Minne: University of Connecticut

The Journal of Real Estate Finance and Economics, 2022, vol. 65, issue 2, No 6, 359 pages

Abstract: Abstract In this paper we analyze market segmentation by firm size in the commercial real estate transaction process. Using novel micro-level data, we look at the probability distribution of investors acquiring a specific bundle of real estate characteristics, distinguishing between investors based on the size of their real estate portfolio. We find evidence of market segmentation by investor size: institutional investors segment across property characteristics based on the size of their real estate portfolio. The probability that a large (small) seller will sell a property to a similar-sized buyer is higher, keeping all else equal. We explore potential drivers of this market segmentation and find that it is mainly driven by investor preferences. During the Global Financial Crisis (GFC), large investors were less likely to buy the ‘average’ property, as compared to the period before or after the crisis, indicating time-varying investor preferences.

Keywords: Institutional investor; Preferences; Real estate investment; Market segmentation; Size (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11146-020-09816-y

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