Behavioural Adaptation to Seismic Disruptions: Exploratory Evidence from Real Estate Investment Trusts

High-magnitude earthquakes are major disruptors that significantly influence property investment preference in seismic regions. Whereas rational regulatory policies are consistently proposed to enhance investors' adaptation to seismic hazards, scholars have noted that the adaptive response of property investors often deviates from the rational expectations of policymakers. Therefore, by leveraging the behavioural perspective on investment decision-making, this study explores the adaptive strategies of New Zealand Real Estate Investment Trusts (NZ REITs) to seismic disruptions. The study is based on the documentary analysis of the annual reports of NZ REITs, with forty-eight annual reports analysed for content that described how the REITs responded to high-magnitude seismic events that threatened their well-established business operation models over an extended period (from 2009 to 2019). The study findings indicate that notwithstanding the provisions of rational, seismic-related regulations, the adaptive response of NZ REITs to seismic disruption is driven by asset demand and influenced by behavioural factors such as loss aversion location bias, herding and anchoring. By highlighting the complementary significance of rational and intuitive considerations, the findings from this study suggest that NZ REITs are not only compliant but dynamic in their response to seismic disruptions. The research findings could enhance policy formulation and implementation towards ensuring a holistic response to seismic disruptions.