Implications of investors’heterogeneity for the commercialreal estate market– an analysis of the UK market
2020
This doctoral research discusses the behaviours of heterogeneous investors – specifically, the
investors from different foreign countries or markets who have different levels of market
knowledge and market access – in the host private commercial real estate (CRE) market. This
research analyses the partnering strategies of heterogeneous investors under the influence of
existing peer investors in the market, and influences of the local market strategies – brokerage,
local advantage, market experience and strategic alliance forms – to the price paid for CRE
acquisition. Regarding the impacts of the heterogeneous investor group to the market, this
research also investigates the influence of investor group with more diversified nationality
backgrounds on CRE market operation, specifically transaction liquidity.
The study adopts related theories and empirical practice in international business, corporate
governance, market bargaining and social network analysis to enhance the discussion of
commercial real estate investment. With analysis of CRE transactions in London, Manchester,
Liverpool, Midlands and Northern England from 2001 to 2015, the research finds that –
1. Partnering choices of investors are affected by the existing peer groups in the host market;
2. Apart from the local market advantage and market experiences, forming joint venture
partnerships help investor improve market bargaining power and gain a pricing premium;
3. The involvement of foreign investors improve the CRE market liquidity although their initial
activities trigger the price fluctuations. On the other hand, the efficient connectedness among
the market participants with different home countries and capital types are the crucial market
attributes to enhance the market liquidity.
With the research findings, the study aims to introduce the topics and methods in international
business strategy and social network analysis into real estate studies. While the global real estate
investment flows have been increasing, there is lack of discussion on the investment strategies of
foreign investors in the opaque host CRE market; this doctoral study fills this gap with discussions
and empirical evidence. Moreover, change to the market participants in the host CRE market
affect market operation and market depth in the long term; accordingly, both investors and
regulatory parties need to be aware of the change of the market. This doctoral research aims to
provide practical implications with effective monitoring methods to the study of investment
market structure and financial stability.
Chapter 1 introduces the research motivations, research questions and main findings. In the
following three chapters, the research investigates the topics of foreign investors’ strategic
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alliance, property deal pricing and transaction network respectively. These chapters discuss the
questions from transaction microstructure to market structure. The three chapters are also
independent research papers. Chapter 5 summarises the findings of the three studies, evaluates
the research implications and discuss the potential for further research. Supplementary
information and results are in the appendices.
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