THE IMPACT OF COUNTRY RISK ON INTERNATIONAL REAL ESTATE RETURNS
||THE IMPACT OF COUNTRY RISK ON INTERNATIONAL REAL ESTATE RETURNS
||Book of Abstracts: 13th Annual European Real Estate Society Conference in Weimar, Germany
||Commercial real estate investors usually have well-established methods to assess the risks of a property investment in their home country. However, when the investment decision is overseas another dimension of uncertainty overlays the analysis. This additional dimension, typically called country risk, encompasses the uncertainty of achieving expected financial results solely due to factors relating to the investment’s location in another country. However, very little has been done to examine the effects of country risk on international real estate returns, even though in international investment decisions considerations of country risk dominate other effects. This study extends the literature on international real estate diversification by empirically estimating the impact of country risk, as measured by Euromoney Country Risk (ECR) data, on the direct real estate returns of 15 countries over the period 1998-2005, using cross section and pooled data analyses. The results suggest that country risk data may help investor’s in their international real estate decisions since the ECR index has a significant and consistent impact of return performance.
||international real estate returns; country risk
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