University of Oulu

Martin Hoesli & Elias Oikarinen (2021) Does listed real estate behave like direct real estate? Updated and broader evidence, Applied Economics, 53:26, 3023-3042, DOI: 10.1080/00036846.2020.1870921

Does listed real estate behave like direct real estate? : updated and broader evidence

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Author: Hoesli, Martin1,2; Oikarinen, Elias3,4,5
Organizations: 1Geneva Finance Research Institute and Swiss Finance Institute, University of Geneva, Geneva, Switzerland
2Business School, University of Aberdeen, Aberdeen, UK
3Department of Economics, Accounting and Finance, University of Oulu, Oulu, Finland
4Department of Built Environment, Aalto University, Helsinki, Finland
5Department of Economics, University of Turku, Turku, Finland
Format: article
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 0.9 MB)
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Language: English
Published: Informa, 2021
Publish Date: 2021-07-02


This study investigates a question relevant to many investors: do the broad Real Estate Investment Trust (REIT) return characteristics reflect those of the broad direct real estate markets. The paper makes several contributions to the literature in addition to using more recent data: (1) we use data for six countries (Australia, France, Germany, Netherlands, the U.K., and the U.S.); (2) we estimate both country-specific and panel models to increase the reliability and generalizability of the analysis; (3) we estimate a structural vector autoregressive model to be able to better and more reliably interpret the various shocks in the system; and (4) we investigate the effects of global liquidity shocks, among other shocks. Our results indicate that over the mid to long horizon, broad REIT and direct returns have similar characteristics and are highly correlated at the panel level. Also, the two types of exposure to real estate exhibit similar reactions to economic shocks. Thus, the paper makes a case that investors do not necessarily need to worry much about compositional effects when aiming to track broad international direct market performance by investing in listed real estate.

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Series: Applied economics
ISSN: 0003-6846
ISSN-E: 1466-4283
ISSN-L: 0003-6846
Volume: 53
Issue: 26
Pages: 3023 - 3042
DOI: 10.1080/00036846.2020.1870921
Type of Publication: A1 Journal article – refereed
Field of Science: 511 Economics
Funding: This work was supported by the European Public Real Estate Association.
Copyright information: © 2021 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License (, which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or built upon in any way.