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Capital cost sensitivity of real estate corporate investment |
| LIU Hongyu, XU Yuejin, JIANG Peiyan |
| Hang Lung Center for Real Estate, Department of Construction Management, Tsinghua University, Beijing 100084, China |
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Abstract The capital cost sensitivity of real estate corporate investment is estimated using a generalized method of moments of a dynamic panel based on data of listed companies. The results show that the “investment-capital cost sensitivity” of real estate corporations is not significant, which reveals the irrationality of real estate investment. Secondly, small and medium enterprises are more sensitive to debt cost than large real estate enterprises. Therefore, small and medium corporations have less debt. In addition, the “investment-capital cost sensitivity” can be influenced by adaptive expectation, which is an important characteristic of small and medium corporations. With the slowdown in housing price increases after the first quater of 2011, small and medium size real estate enterprises have begun to pay close attention to capital costs, while the “investment-capital cost sensitivity” of large corporates is still not a significant concern.
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| Keywords
real estate investment
capital cost sensitivity
debt risk
adaptive expectation
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Issue Date: 15 June 2015
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2015,
Vol. 55
