The financial deregulation of the last quarter century has meant
large flows of funds around the world seeking the highest
risk-adjusted return for investors. Real estate is now established
as an important asset class and advances in information technology
provide the necessary tools to complement global developments in
real estate finance and investment.
A variety of investment vehicles have emerged, and Real Estate
Finance in the New Economy examines these along with
financing and risk in the context of globalization, deregulation
and an increasingly integrated international world economy by
exploring questions like:
* How have real estate financial structures evolved as economies
grow and become internationalised?
* What role do economic change and financial systems play in the
development of real estate investment?
* Are the risks associated with the ‘new economy’
really new?
* What is the future direction for real estate financing?
The authors develop an economic framework for discussions on
individual financial products to examine how real estate financial
structures change with economic growth and internationalisation and
also to show how developments in real estate finance impact
economic growth.
Daftar Isi
Preface xi
Acknowledgements xiii
1 International Economic Developments since the 1970s1
Introduction 1
International trade theories: Setting the scene 2
International goods and capital flows 3
Theoretical models of trade 7
The Dunning eclectic paradigm 19
Porter’s model of competitive advantage of nations 24
Trading blocs and globalisation 27
Conclusions 28
Notes 28
References 28
2 International Real Estate Markets: Evolution 31
Introduction 31
Size of property market 33
User market 35
Investment market 42
Investor profile 48
Development 50
Financing of property 52
International real estate activity and trade models 55
Conclusions 59
Note 60
References 60
3 Financial Systems, Flow of Funds to Property and Innovations 63
Introduction 63
Bank-based and market-based financial systems 64
Property investors and intermediaries 67
Investment mechanisms 68
Innovations 74
Economic assessment of investment mechanisms 76
Impact of new investment mechanisms on business culture andpractices 81
Conclusions 82
References 83
4 Property Investors, Investment Vehicles and Strategies85
Size of property 85
Investment and investors 86
Property in investment portfolio 92
Investment strategies 98
Property investment and leverage 101
Conclusions 103
Appendix 4.1 104
References 107
5 Financial Markets, the New Economy and the Risk 109
Introduction 109
Value determinants of real estate in the twenty-first century112
Theorising real estate linkages in the new economy 116
Financing of real estate in new economy 119
Leverage and risks 123
Conclusions 126
References 126
6 Real Estate Asset Bubbles 129
An introduction to cycles in real estate 129
Expectations and bubbles 136
Formation of real estate bubbles and its detection 139
Key patterns of past real estate bubbles 140
Explanations in the literature, new economy and role of credit149
Conclusions 152
References 152
7 International Capital Flows in Property: Portfolio Diversification or Return Chasing 155
Introduction 155
Theoretical considerations in portfolio investment 159
Direct property in multi-asset portfolios 162
Direct property in property-only portfolios 164
Indirect property investment in multi-asset portfolios 165
Indirect real estate investment in real estate-only portfolios166
Contradictions in research on diversification benefits frominternational property investment 167
Capital flows and property returns 168
Conclusions 170
References 170
8 International Financial Innovation, Real Estate and the Macroeconomy 175
Introduction 175
Real estate and macroeconomic interactions: Cycles and trends175
Market cycles, risk and regional offices 187
Bubbles in asset markets 209
Risk management 210
Observations and conclusions 212
Notes 214
References 214
9 International Financial Innovation and Real Estate Market Performance 219
Introduction 219
Mortgage product development 219
Why use debt? 220
Risk analysis 222
Variable risk 223
The secondary mortgage market 224
Institutions and market performance 228
Cycles in real estate and the availability of finance 233
Conclusions 235
References 237
10 Real Estate in the New Economy 239
Introduction 239
The new economy and world economic structure 240
Real estate in the new economy 252
Overview and conclusions 255
Note 258
References 259
Index 261
Tentang Penulis
Piyush Tiwari is Associate Professor of Property, Faculty of Architecture, Building and Planning, University of Melbourne
Michael White is Professor of Real Estate Economics, School of Architecture, Design and the Built Environment, Nottingham Trent University
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