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Timing and the Holding Periods of Institutional Real Estate
Author(s) -
Collett David,
Lizieri Colin,
Ward Charles
Publication year - 2003
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00063
Subject(s) - obsolescence , depreciation (economics) , real estate , economics , monetary economics , volatility (finance) , transaction cost , database transaction , financial economics , business , finance , microeconomics , profit (economics) , capital formation , marketing , financial capital , computer science , programming language
Literature on investors' holding periods for securities suggests that high transaction costs are associated with longer holding periods. Return volatility, by contrast, is associated with shorter holding periods. In real estate, high transaction costs and illiquidity imply longer holding periods. Research on depreciation and obsolescence suggests that there might be an optimal holding period. Sales rates and holding periods for U.K. institutional real estate are analyzed, using a proportional hazards model, over an 18‐year period. The results show longer holding periods than those claimed by investors, with marked differences by type of property and over time. The results shed light on investor behavior.