Industrial Real Estate Investment: Does the Contrarian Strategy Work? |
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Authors: | Kwame Addae-Dapaah James R Webb Kim Hin David Ho Yan Fen Tan |
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Institution: | (1) Department of Real Estate, School of Design and Environment, National University of Singapore, 4 Architecture Drive, Singapore, 117566, Singapore;(2) Department of Finance, College of Business, Cleveland State University, Cleveland, OH, USA |
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Abstract: | The superiority of the contrarian investment strategy, though well attested to in the finance literature, has received scant
attention, if any, in the real estate literature. This study uses empirical industrial real estate investment return data
from 1985Q1 to 2005Q3 for the US, and some Asia Pacific cities in order to ascertain the relative superiority of “value” and
“growth” industrial real estate investments. The results show that “value” industrial property investment outperformed “growth”
industrial property investment in all the holding periods under consideration. Furthermore the industrial property investments
exhibit return reversal. This implies that the superiority of the contrarian strategy is sustainable. The results of stochastic
dominance tests validate the relative superiority of “value” over “growth” industrial property investment. This implies that
fund managers who traditionally have been favoring prime (i.e. growth) industrial property investment may have to reconsider
their investment strategy if they want to maximize their return. |
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