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COVID-19 Losses to the Real Estate Market: An Equity Analysis

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  • Chong, James
  • Phillips, G. Michael

Abstract

This is the first paper to estimate the dollar impact of COVID-19 on the aggregate value of United States commercial real estate. With the compounding effects of telecommuting, social distancing, restrictions on commerce, and business closures, few sectors have been as hard hit by the COVID-19 pandemic as commercial real estate. Analyzing traded REITs provides statistical estimates of the decline in United States commercial real estate values. Applying MacroRisk.com's commercial stock valuation models which use key economic factors to value equities, we evaluate the impact of economic changes on commercial real estate values. We find that real estate markets would have likely realized substantially greater declines but for the extreme monetary and fiscal policy pursued during the early months of the pandemic.

Suggested Citation

  • Chong, James & Phillips, G. Michael, 2022. "COVID-19 Losses to the Real Estate Market: An Equity Analysis," Finance Research Letters, Elsevier, vol. 45(C).
    • Handle: RePEc:eee:finlet:v:45:y:2022:i:c:s1544612321002129
    DOI: 10.1016/j.frl.2021.102131
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    Citations

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    Cited by:

    1. Nihal Ahmed & Zeeshan Hamid & Khalil Ur Rehman & Piotr Senkus & Nisar Ahmed Khan & Aneta Wysokińska-Senkus & Barbara Hadryjańska, 2023. "Environmental Regulation, Fiscal Decentralization, and Agricultural Carbon Intensity: A Challenge to Ecological Sustainability Policies in the United States," Sustainability, MDPI, vol. 15(6), pages 1-21, March.
    2. Mensi, Walid & Gubareva, Mariya & Teplova, Tamara & Kang, Sang Hoon, 2023. "Spillover and connectedness among G7 real estate investment trusts: The effects of investor sentiment and global factors," The North American Journal of Economics and Finance, Elsevier, vol. 66(C).
    3. Guo, Wei, 2024. "Income volatility and household commercial insurance allocation," Finance Research Letters, Elsevier, vol. 66(C).
    4. Armah, Mohammed & Amewu, Godfred, 2024. "Quantile dependence and asymmetric connectedness between global financial market stress and REIT returns: Evidence from the COVID-19 pandemic," The Journal of Economic Asymmetries, Elsevier, vol. 29(C).
    5. Bossman, Ahmed & Umar, Zaghum & Teplova, Tamara, 2022. "Modelling the asymmetric effect of COVID-19 on REIT returns: A quantile-on-quantile regression analysis," The Journal of Economic Asymmetries, Elsevier, vol. 26(C).
    6. Hanif, Waqas & Andraz, Jorge Miguel & Gubareva, Mariya & Teplova, Tamara, 2024. "Are REITS hedge or safe haven against oil price fall?," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 1-16.
    7. Chan, Kam Fong & Chen, Zhuo & Wen, Yuanji & Xu, Tong, 2022. "COVID-19 vaccines and global stock markets," Finance Research Letters, Elsevier, vol. 47(PB).
    8. Abdullah, Mohammad & Adeabah, David & Abakah, Emmanuel Joel Aikins & Lee, Chi-Chuan, 2023. "Extreme return and volatility connectedness among real estate tokens, REITs, and other assets: The role of global factors and portfolio implications," Finance Research Letters, Elsevier, vol. 56(C).

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