City Research Online

Abstract

Taking advantage of the standard regulation of real estate investment trusts (REITs) around the world, we study the implications for housing markets of the entry of institutional investors in 57 cities in 15 countries for the period 2001-2022. We employ an IV approach based on the exogenous demand for REITs by pension funds triggered by changes to the retired population. We show that residential equity REIT capital flows push up multifamily house prices, and are associated with declining rents, potentially affecting households’ homeownership vs renting decisions. Estimating a CS-ECM model, we find that REITs exert long-run effects on housing markets.

Publication Type:	Article
Additional Information:	This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited. © 2024 The Author(s). Real Estate Economics published byWiley Periodicals LLC on behalf of American Real Estate and Urban Economics Association.
Publisher Keywords:	Financialization; House prices; Real estate investment trusts (REITs); Institutional investors
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HG Finance
Departments:	Bayes Business School Bayes Business School > Finance
SWORD Depositor:	Symplectic Administrator

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