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Investing in International Real Estate Stocks: A Review of the Literature

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  • Elaine Worzala

    (Real Estate Institute, School of Business-Olin Hall, Room 340, University of San Diego, 5998 Alcala Park, San Diego, CA 92110-2492, USA. eworzala@sandiego.edu)

  • C.F. Sirmans

    (Center for Real Estate and Urban Economic Studies, School of Business, University of Connecticut, 2100 Hillside Road, Unit 1041RE, Storrs, Connecticut 06269-1041, USA. cf@business.uconn.edu)

Abstract

This paper summarises the various findings of studies completed on the benefits of international diversification using real estate stocks. With the increased availability of data and analytical tools, the quantity and variety of work over the past decade have increased dramatically in this area. The first two sections of the paper chronologically review the studies, focusing on how the diversification benefits are analysed: in a mixed-asset portfolio context or a real-estate-only portfolio context. The third section highlights work that uses alternative analyses to the traditional mean-variance framework to examine the international real estate stock as an investment alternative. Almost all of the studies reach the same conclusion: diversification gains are possible but are often reduced if currency risk is included in the analysis.

Suggested Citation

  • Elaine Worzala & C.F. Sirmans, 2003. "Investing in International Real Estate Stocks: A Review of the Literature," Urban Studies, Urban Studies Journal Limited, vol. 40(5-6), pages 1115-1149, May.
    • Handle: RePEc:sae:urbstu:v:40:y:2003:i:5-6:p:1115-1149
    DOI: 10.1080/0042098032000074344
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    References listed on IDEAS

    as
    1. C.F. Sirmans & Elaine Worzala, 2003. "International Direct Real Estate Investment: A Review of the Literature," Urban Studies, Urban Studies Journal Limited, vol. 40(5-6), pages 1081-1114, May.
    2. Foort Hamelink & Martin Hoesli, 2004. "What Factors Determine International Real Estate Security Returns?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 32(3), pages 437-462, September.
    3. Crocker H. Liu & David J. Hartzell & Martin E. Hoesli, 1997. "International Evidence on Real Estate Securities as an Inflation Hedge," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 25(2), pages 193-221, June.
    4. Hoesli, M & MacGregor, B, 1997. "Inflation Hedging Versus Inflation Protection in the US and the UK," Papers 97.09, Ecole des Hautes Etudes Commerciales, Universite de Geneve-.
    5. Conlin Lizieri & Steven Satchell & Elaine Worzala & Roberto Dacco', 1998. "Real Interest Regimes and Real Estate Performance: A Comparison of UK and US Markets," Journal of Real Estate Research, American Real Estate Society, vol. 16(3), pages 339-356.
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    14. Piet Eichholtz & Ronald Huisman & Kees Koedijk & Lisa Schuin, 1998. "Continental Factors in International Real Estate Returns," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 26(3), pages 493-509, September.
    15. Tom G. Geurts & Austin J. Jaffe, 1996. "Risk and Real Estate Investment: An International Perspective," Journal of Real Estate Research, American Real Estate Society, vol. 11(2), pages 117-130.
    16. Simon Stevenson, 2001. "A Re-Examination of the Inflation-Hedging Ability of Real Estate Securities: Empirical Tests Using International Orthogonalized & Hedged Data," International Real Estate Review, Global Social Science Institute, vol. 4(1), pages 26-42.
    17. Crocker H. Liu & Jianping Mei, 1998. "The Predictability of International Real Estate Markets, Exchange Rate Risks and Diversification Consequences," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 26(1), pages 3-39, March.
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