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Three Dimensions of Capital Switching within the Real Estate Sector: A Canadian Case Study

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  • Igal Charney

Abstract

This article analyzes capital switching practices in the real estate development sector. The leading practitioners in Canada, the Canadian‐based real estate companies, are the subject of this inquiry. The tradability and divisibility of real estate properties enhance the growing similarity between real estate properties and other financial assets. It is appropriate to talk about portable real estate portfolios because companies constantly rearrange their property composition. This article emphasizes the ‘three dimensions of capital switching’. These dimensions unpack significant corporate considerations in the deployment and redeployment of capital, namely, mode of operation, property type and location. With respect to office development, the trajectory of the major real estate companies over the last 20 years has accommodated two notable shifts. First, these companies have focused on larger and newer properties, disposing of their smaller and older assets. Second, they have funneled a growing share of their capital assets into the top‐tier cities of the Canadian urban system, reducing investment in other metropolitan areas and disinvesting in the small‐to‐medium sized cities. Cet article analyse les pratiques de permutation de capitaux dans le secteur de la promotion immobilière. L’étude porte sur les principaux acteurs canadiens, c’est‐à‐dire les sociétés immobilières basées au Canada. Les possibilités de commercialisation et de division des biens immobiliers accentuent leur similitude avec d’autres actifs financiers; on peut parler de portefeuilles immobiliers transférables puisque les sociétés réajustent constamment la composition de leurs biens. Cet article souligne les ‘trois dimensions de la permutation de capitaux’. Celles‐ci expriment d’importants critères de réflexion pour les entreprises quant à l’utilisation et la reconversion du capital, à savoir le mode d’exploitation, le type de bien et son emplacement. En ce qui concerne l’exploitation de bureaux, les grandes sociétés immobilières ont connu, au cours des 20 dernières années, deux tournants importants dans leur ligne de conduite. Tout d’abord, elles se sont consacrées à des biens plus grands et plus récents en se débarrassant de leurs actifs anciens et de petite taille. Ensuite, elles ont concentré un part croissante de leurs immobilisations dans les grandes villes cotées du système urbain canadien, réduisant leur investissement dans les autres zones métropolitaines et désinvestissant dans les villes de petite et moyenne envergure.

Suggested Citation

  • Igal Charney, 2001. "Three Dimensions of Capital Switching within the Real Estate Sector: A Canadian Case Study," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 25(4), pages 740-758, December.
  • Handle: RePEc:bla:ijurrs:v:25:y:2001:i:4:p:740-758
    DOI: 10.1111/1468-2427.00342
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    Cited by:

    1. Marijana Srećković, 2018. "The performance effect of network and managerial capabilities of entrepreneurial firms," Small Business Economics, Springer, vol. 50(4), pages 807-824, April.
    2. Thomas Wainwright, 2009. "Laying the Foundations for a Crisis: Mapping the Historico‐Geographical Construction of Residential Mortgage Backed Securitization in the UK," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 33(2), pages 372-388, June.
    3. Natacha Aveline-Dubach, 2014. "New Patterns of Property Investment in " Post-Bubble " Tokyo [Les nouvelles formes de l'investissement immobilier dans l'après-bulle à Tokyo]," Post-Print halshs-01242564, HAL.
    4. Greig Charnock & Thomas F. Purcell & Ramon Ribera-Fumaz, 2014. "City of Rents: The limits to the Barcelona model of urban competitiveness," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 38(1), pages 198-217, January.
    5. V. P. Nirmal Roy, 2020. "Part-time Brokers in Financialised Rural Land Markets: Processes, Typology and Implications," Review of Development and Change, , vol. 25(1), pages 70-88, June.
    6. Ming-Long Lee & Ming-Te Lee & Kevin Chiang, 2008. "Real Estate Risk Exposure of Equity Real Estate Investment Trusts," The Journal of Real Estate Finance and Economics, Springer, vol. 36(2), pages 165-181, February.
    7. Kevin Fox Gotham, 2009. "Creating Liquidity out of Spatial Fixity: The Secondary Circuit of Capital and the Subprime Mortgage Crisis," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 33(2), pages 355-371, June.
    8. Mengzhu Zhang & Si Qiao & Xiang Yan, 2021. "The secondary circuit of capital and the making of the suburban property boom in postcrisis Chinese cities," Environment and Planning A, , vol. 53(6), pages 1331-1355, September.
    9. Thierry Theurillat & Patrick Rérat & Olivier Crevoisier, 2015. "The real estate markets: Players, institutions and territories," Urban Studies, Urban Studies Journal Limited, vol. 52(8), pages 1414-1433, June.
    10. Igal Charney, 2003. "Unpacking and Repackaging Regional Diversity: Office-Building Trajectories in Canada," Environment and Planning A, , vol. 35(2), pages 231-248, February.
    11. Nick Revington & Martine August, 2020. "Making a market for itself: The emergent financialization of student housing in Canada," Environment and Planning A, , vol. 52(5), pages 856-877, August.
    12. Ming-Te Lee & Chyi Lin Lee & Ming-Long Lee & Chien-Ya Liao, 2017. "Price linkages between Australian housing and stock markets," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 10(2), pages 305-323, April.
    13. William Kutz, 2016. "The Eurozone Crisis and Emerging-Market Expansion: Capital Switching and the Uneven Geographies of Spanish Urbanization," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 40(6), pages 1075-1093, November.
    14. Rachel Weber, 2010. "Selling City Futures: The Financialization of Urban Redevelopment Policy," Economic Geography, Clark University, vol. 86(3), pages 251-274, July.
    15. Vinay Gidwani & Carol Upadhya, 2023. "Articulation work: Value chains of land assembly and real estate development on a peri-urban frontier," Environment and Planning A, , vol. 55(2), pages 407-427, March.
    16. Thierry Theurillat & Pierre-Yves Donzé, 2015. "Retail Networks and Real Estate: the case of Swiss luxury watches in China and Southeast," Discussion Papers in Economics and Business 15-28, Osaka University, Graduate School of Economics.
    17. Robert A. Beauregard, 2005. "The Textures of Property Markets: Downtown Housing and Office Conversions in New York City," Urban Studies, Urban Studies Journal Limited, vol. 42(13), pages 2431-2445, December.
    18. Heeg Susanne, 2004. "Mobiler Immobilienmarkt? Finanzmarkt und Immobilienökonomie," ZFW – Advances in Economic Geography, De Gruyter, vol. 48(1), pages 124-137, October.
    19. Tom Goodfellow, 2017. "Urban Fortunes and Skeleton Cityscapes: Real Estate and Late Urbanization in Kigali and Addis Ababa," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 41(5), pages 786-803, September.
    20. Heeg Susanne, 2009. "Wie Phönix aus der Asche?: Immobilienwirtschaftliche Forschung in der Geographie," ZFW – Advances in Economic Geography, De Gruyter, vol. 53(1-2), pages 129-137, October.

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