A Fundamental Comparison of International Real Estate Returns

Joseph Pagliari, James Webb, Todd Canter and Frederich Ssr

Journal of Real Estate Research, 1997, vol. 13, issue 3, 317-347

Abstract: This study analyzes commercial real estate returns in Australia, Canada, the United Kingdom and the United States over the period 1985-95, from the perspective of a U.S. investor. Because national indices can consist of differing property mixes, this study separately analyzes the office, retail and warehouse sectors. Moreover, these analyses also convert total returns into their fundamental components: initial yield, growth in income and shifts in capitalization rates. The paths of currency-adjusted income and asset values and, therefore, capitalization rates are also presented. Generally speaking, the fundamental components of retail returns across the four countries exhibit greater divergence than the office and warehouse sectors. It is interesting that the U.S. property sectors showed the worst performance, while the Australian retail and the British office and warehouse sectors were the best performers (both before and after currency adjustments). Additionally, the currency-adjusted Australian returns were adversely effected by exchange rate movements, while the British returns were positively effected. Lastly, the correlation of the quarterly percentage change in income was generally lower and less statistically significant than the correlation patterns observed among the other components of return. This might suggest that more idiosyncratic risk can be found in the real estate space markets (as proxied by income changes) than in the real estate capital markets (as proxied by the pricing of the income—that is, capitalization rates), which appear to be more globally influenced.

Date: 1997
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/10835547.1997.12090881 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:rjerxx:v:13:y:1997:i:3:p:317-347

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rjer20

DOI: 10.1080/10835547.1997.12090881

Access Statistics for this article

Journal of Real Estate Research is currently edited by William Hardin and Michael Seiler

More articles in Journal of Real Estate Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().