Are There Investor Clienteles in Rental Housing? |
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Authors: | Gavin A. Wood Yong Tu |
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Affiliation: | School of Economics, Murdoch University, Australia or .;Department of Real Estate, School of Design and Environment, National University of Singapore, Singapore or . |
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Abstract: | The possible existence of investor clientele groups has received little attention in the real estate finance literature. In this paper we develop a clientele model, which in equilibrium produces a clustering of investors by tax characteristics. Low-tax-bracket investors are concentrated in low-value rental housing that attracts rents which are high in relation to property values. On the other hand, only high-tax-bracket investors will be observed in high-value rental housing, and they charge rents that are low in relation to property values. An empirical model is specified and estimated using a cross section of investors in Australian private rental housing markets. Investor clienteles are detected among property investors, though there is a weak diversification effect indicating that clientele effects may be stronger among single property investors. |
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