An analysis of investor types in real estate capital markets : their behavior and performance from 2000 to 2006

This thesis explores the timing and returns of eight types of real estate investors between 2000 and 2006. The investor types considered are 1) private local, 2) private national, 3) institutional, 4) public REIT (Real Estate Investment Trust), 5) foreign, 6) user/other, 7) syndicator and 8) condo converter. Observing over 41,000 transactions and using the repeat sale method to calculate investor capital appreciation returns, this thesis finds that private local investors are the largest investor type-both in absolute number and transaction volume-suggesting that real estate is still a very local business. In addition, this thesis observes that REIT, foreign and private investors each exhibited leading behavior over other investors, especially institutions, in capital flows: they each tended to start trends in buying and selling at various times from 2000 to 2006. Moreover, it finds that REIT, foreign and private investors took turns in earning the highest cumulative capital appreciation returns from 2000 to 2006, and that private local investors tended to lead all other investors, especially institutional, in return trends. These findings are significant as they increase the understanding of investor behavior and performance in capital markets and may ultimately help increase market information and efficiency.