Capital's Quest for Space: The Globalisation of Metropolitan Real Estate Markets - An Institutional Perspective
||Ruiz Lorbacher, Matias
||Capital's Quest for Space: The Globalisation of Metropolitan Real Estate Markets - An Institutional Perspective
||Book of Abstracts: 15th Annual European Real Estate Society Conference in Kraków, Poland
||The thesis focuses on the spatial implications of the globalisation of real estate investments and the integration of financial and real estate markets. As cities have always been places of large public and private investment in the built environment, urban development can be viewed as the interplay of capital investment of different actors and processes of political regulation. The globalisation of the real estate business has led to a partial ‘detachment’ of relevant actors from local and regional contexts. Aside from globalisation, the integration of real estate and financial markets as well as the concentration of real estate investors in metropolitan regions are two further trends (CLARK/LUND 2000; HEEG 2004, 2003). The globalisation process is accompanied by an expansion as well as a de- and reterritorialisation of social and economic relationships and practices (BRENNER 1997). Investing in real estate markets outside one's own national borders has become much easier to accomplish. Real estate markets, especially in metropolitan areas, have evolved from a mainly local to a strongly international orientation. One positive effect of this is that market transparency and the number of economic players have increased, resulting in changes of the institutional settings of real estate markets.
||The globalisation of real estate markets and the de- and reterritorialisation of social and economic relationships and practices reveals an underlying general feature of capitalist markets - the problem of coordinating market players (BECKERT 2007). In spite of increasing professionalisation of real estate business, uncertainties, frictions and contingencies persist in real estate markets. Market activities and exchange of property only take place if market players can cope with and reduce uncertainties and contingencies to an acceptable manner. A precondition for a stabilized mode of reducing uncertainty consists in the institutional embedding of market action (FLIGSTEIN 2001, 1996). Within real estate markets, coordination is hampered by the problem of value. Defining values for heterogeneous real estate products within the same local and regional markets depends on reducing uncertainty and on establishing more or less objective and standardized criteria. But this is not easy to achieve due to certain factors. Firstly, the globalisation and integration of capital and real estate markets extends the number of potential market players in formerly locally fixed real estate markets, e.g. institutional investors such as pension funds which invest directly and indirectly in real estate (CLARK 2003, 2001). The different players "engage in distinct 'readings' of the markets" (BEAUREGARD 2005: 2433), as the different submarkets and sectors of the real estate market differ in the life cycles, expected return on investment, building types and demands of the tenants and users etc. Thus, the price mechanism as a means of providing the best available information about the real estate market is limited (also KEOGH/D’ARCY 1999). Secondly, the problem of finding a value is aggravated by the characteristics of real estate as "spatialized capital, _that_ unlike derivates or corporate equities, has the unique (dis)advantage of having its value held hostage by the vagaries of proximity and its relationship to other properties" (WEBER 2002: 521). Thus, it would appear essential to ascertain how locally fixed real estate markets become international markets and how the coordination of heterogeneous market players is achieved. The focus of this paper is on the construction of real estate markets, especially on the mechanisms and institutions of the internationalisation and globalisation of real estate markets. The empirical part of this work mainly involves investigations of investments in commercial property, especially offices. Two different metropolitan areas will be compared and contrasted. The empirical work will be conducted this summer. It will mainly consist of semi-structured expert interviews.
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