Please use this identifier to cite or link to this item: https://scholarbank.nus.edu.sg/handle/10635/220875
Title: REITS � IMPACT ON INDUSTRIAL PROPERTY DEVELOPMENT
Authors: ZHAN QIJIE ROYCE
Keywords: Real Estate
RE
Seah Kiat Ying
2015/2016 RE
Issue Date: 3-May-2016
Citation: ZHAN QIJIE ROYCE (2016-05-03). REITS � IMPACT ON INDUSTRIAL PROPERTY DEVELOPMENT. ScholarBank@NUS Repository.
Abstract: The emergence of REITs in the past decade has resulted in a separate public market for real estate that generates serious concerns about its overall impact on the property market. This dissertation seeks to study the impact of REITs on industrial property development. Using the Herfindahl–Hirschman Index to measure the market power of I-REITs, the study show that the presence of I-REITs actually result in a more competitive industrial property market, rebutting the existing theory that the development of a REITs market will actually lead to a consolidation of market power for REITs that may induce theories of harm. The vector error correction model is adopted to examine the significance of securitisation and other key real estate and economic variables in determining new industrial property development both in the long run as well as the short run. The methodology could explain new industrial development well: securitisation concentration, prime lending rate and vacancy rate were statistically significant long-run determinants of industrial property development. The VECM implies a good fit for the modelling of industrial property development. Securitisation concentration along with other real estate and economic variables jointly explain 85.94% of the variation of building commencements. In the short run, lagged variable of building commencements, securitisation concentration, industrial rental index, vacancy rate and prime lending rate are all statistically significant in explaining the change in the level of building commencements. An additional VAR model is employed for comparison purpose and the estimated coefficients further reinforce the results of the VECM. Overall, the results confirmed the main hypothesis of this dissertation that securitisation does has an impact on industrial property development and this impact is positive both in the long run as well as the short run. With the findings from this paper, policy makers and industrial investors/developers can make a better forecast of new industrial supply to assist them in their policy decisions and investment strategies respectively. The study can also be applied to other real estate sectors such as the commercial and hospitality property market to see if the same relationship between securitisation and property development holds true.
URI: https://scholarbank.nus.edu.sg/handle/10635/220875
Appears in Collections:Bachelor's Theses

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