THE INTEREST RATE SPREAD AND REAL ESTATE RETURNS ---- EVIDENCE FROM HONG KONG
||Xu, Yishuang; Yiu, Chung Yim, Yiu
||THE INTEREST RATE SPREAD AND REAL ESTATE RETURNS ---- EVIDENCE FROM HONG KONG
||17th Annual European Real Estate Society Conference in Milan, Italy
||As the capitalization rates are tightly related to the required rates of return, there are a number of dynamics driving capital markets can help to explain the observed cap rates over time. Anyway, there are few researches discussing about why and how real estate cap rates and capital market interact. This paper employs a model to explore why the cash flow of real estate market is influenced by the changes of capital market. Furthermore, we employ data from Hong Kong real estate and capital markets to investigate how cap rates are affected by the capital market dynamics. The findings reveal a moderate relation between cap rates and term-spread of interest rate, as well as evidence of influence of the capital flowing from foreign markets to domestic market.
||capitalization rate, cash flow, interest rate, foreign investment, expected rental growth
||file.ppt (971,264 bytes)
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