Political Corruption and Commercial Property Portfolio Performance

George Cashman, David Harrison and Hainan Sheng

ERES from European Real Estate Society (ERES)

Abstract: This paper investigates the impact of local government corruption on the commercial real estate market, aiming to understand how convictions for local corruption influence the property portfolio performance of publicly traded real estate investment trusts. Our findings consistently demonstrate that corruption leads to a decrease in subsequent property portfolio returns across a multitude of alternative econometric specifications. Additionally, this research also explores the interaction between corruption and property concentration, specifically finding that while highly concentrated property portfolios generally exhibit lower returns, such clustering appears to be (at least in part) a defensive mechanism in highly corrupt regions designed to offset potential adverse effects. In sum, this study sheds light on the intricate dynamics within the real estate investment landscape, emphasizing the need to address corruption-related challenges to economic returns on real estate investments.

Keywords: political corruption; Property portfolio returns; Real Estate Investment (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2025-01-01
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