Real estate investment trust (REIT) managers generally prefer to focus on domestic real estate investments (Zhou and Sah, 2009). Clear evidence of home bias exists for the US market, where out-of-state buyers pay a premium for real estate assets due to higher search and transaction costs (Lambson et al., 2004). The Asian REIT industry is quite young—its first REIT was issued in 2001—and is dominated by Japanese and Singapore investment vehicles (J-REITs and S-REITs, respectively) (Ooi et al., 2006). Performance analysis of the Asian REIT industry has focused on the differences among Asian market performances (Tsai et al., 2010) and their role in an international diversified portfolio that considers indirect real estate investments and other types of financial instruments, such as stocks (Yat-Hung et al., 2008). However, no studies provide evidence of the role of home bias in the performance of Asian REITs. Examining REITs in Standard and Poor’s Global REIT Index, this chapter compares the home bias of Asian REITs with that of other countries in the index (mainly the United States and Europe). After identifying the differences in home bias among these markets, we evaluate whether more geographically concentrated Asian REITs achieve higher or lower unexpected performance with respect to less concentrated Asian REITs.The results demonstrate that the degree of REIT home bias differs across countries and that Asian REITs are not always the most geographically concentrated. Empirical analysis of the impact of geographical concentration on performance reveals interesting differences between home-biased and non-home-biased Asian REITs.

(2014). Home Bias in Asian REIT Portfolio Investment Strategies [book chapter - capitolo di libro]. Retrieved from http://hdl.handle.net/10446/31596

Home Bias in Asian REIT Portfolio Investment Strategies

GIBILARO, Lucia;
2014-01-01

Abstract

Real estate investment trust (REIT) managers generally prefer to focus on domestic real estate investments (Zhou and Sah, 2009). Clear evidence of home bias exists for the US market, where out-of-state buyers pay a premium for real estate assets due to higher search and transaction costs (Lambson et al., 2004). The Asian REIT industry is quite young—its first REIT was issued in 2001—and is dominated by Japanese and Singapore investment vehicles (J-REITs and S-REITs, respectively) (Ooi et al., 2006). Performance analysis of the Asian REIT industry has focused on the differences among Asian market performances (Tsai et al., 2010) and their role in an international diversified portfolio that considers indirect real estate investments and other types of financial instruments, such as stocks (Yat-Hung et al., 2008). However, no studies provide evidence of the role of home bias in the performance of Asian REITs. Examining REITs in Standard and Poor’s Global REIT Index, this chapter compares the home bias of Asian REITs with that of other countries in the index (mainly the United States and Europe). After identifying the differences in home bias among these markets, we evaluate whether more geographically concentrated Asian REITs achieve higher or lower unexpected performance with respect to less concentrated Asian REITs.The results demonstrate that the degree of REIT home bias differs across countries and that Asian REITs are not always the most geographically concentrated. Empirical analysis of the impact of geographical concentration on performance reveals interesting differences between home-biased and non-home-biased Asian REITs.
book chapter - capitolo di libro
2014
Gibilaro, Lucia; Mattarocci, Gianluca
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