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Investigating Global Cities as Foreign Real Estate Investment Locations: A Gravity Modelling Approach

Author

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  • Rong Wang
  • Anupam Nanda
  • Eero Valtonen

Abstract

In the context of expanding global economic liberalisation and the emergence of an integrated global financial market, there has been a consistent upward trend in global real estate investment over the last few decades. While the previous studies examined the locational choices of foreign real estate investment across countries, there remains a paucity of literature analysing foreign real estate investment at the sub-national level. In this paper, we focus on the notion that real estate is 'local' and investigate the scale and determinants of foreign investment flows between real estate markets at the city level, employing a gravity modelling framework. The study utilises a dataset of the bilateral real estate investment flows across over 40 cities, spanning the period from 2005 to 2021. The result indicates that the economic size of cities boosts the scale of investment flows, and the distance has significant effects on foreign real estate flows. In addition, the finding also reveals that the disparity in real estate market transparency between the markets has a positive association with foreign real estate investment flows.

Suggested Citation

  • Rong Wang & Anupam Nanda & Eero Valtonen, 2024. "Investigating Global Cities as Foreign Real Estate Investment Locations: A Gravity Modelling Approach," ERES eres2024-070, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2024-070
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    More about this item

    Keywords

    Cross-border Capital Flows; Global Cities; Gravity model; Real Estate Investment;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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