Impact Of Institutional Investors On Real Estate Risk April 2, 2021
April 2021 - Real Estate
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By: Dragana Cvijanovic, Stanmira Milcheva and Alex Van De Minne
Abstract
Large institutional investors own an increasing share of the real estate asset market in the U.S. In this paper we seek to understand what are the implications of this recent development. Employing a generalized Hamiltonian Monte Carlo Bayesian procedure we find novel empirical evidence that market entry by large institutional investors predicts higher uncertainty and greater noise in real estate prices in the short and medium run, and lower longitudinal risk in the long run. Our findings point to a signifi cant effect of institutional capital, which serves as a catalyst for structural changes in real estate market volatility.
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