Geography and Realty Prices: Evidence from International Transaction-Level Data

Daisuke Miyakawa, Chihiro Shimizu and Iichiro Uesugi

No 52, HIT-REFINED Working Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: In this paper, we examine the role of the international flow of capital in real estate prices by quantifying the relation between investors' geographical locations and the prices they pay for their realty investments. Our data set contains more than 30,000 realty investment transactions in Australia, Canada, France, Hong Kong, Japan, Netherlands, the United Kingdom, and the United States. First, we find that foreign investors pay significantly higher prices than domestic investors do even after taking a wide variety of controls into account. Second, this overpricing becomes smaller as the buyers' exposure to realty investments in the host countries becomes higher. Third, in support of these results, the investment returns of foreign investors are systematically lower than that of domestic investors. This negative excess return becomes smaller as the buyers' exposure to the host countries becomes higher. These results indicate that the overpricing of foreign investors occurs when investors are less informed about the local property market and lessens with the accumulation of investment experience.

Keywords: Realty Price; Transaction Data; Geographical Location; Fixed Effects (search for similar items in EconPapers)
JEL-codes: D83 F21 G12 R30 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2016-03
New Economics Papers: this item is included in nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/27778/wp052.pdf

Related works:
Working Paper: Geography and Realty Prices: Evidence from International Transaction-Level Data (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:remfce:52

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