Property investment decision making by Australian unlisted property funds : An exploratory study

Purpose The purpose of this paper is to investigate the property investment decision-making process of Australian unlisted property funds. Design/methodology/approach Drawing on previous research into property investment decision making by Australian REITs, a normative model of the unlisted property fund investment decision-making process is proposed. Based on exploratory investigation through semi-structured interviews with senior Australian unlisted property fund decision makers, a descriptive model of the property investment decision-making process by Australian unlisted property funds is developed. The normative model and descriptive model are compared and a prescriptive model of the Australian unlisted property fund investment decision-making process proposed. Findings A four-stage, 20-step process proposed in the normative model was found to be generally supported by the descriptive model developed, potentially comprising a possible prescriptive model for the Australian unlisted property fund investment decision-making process. Research limitations/implications Further research is required to investigate risk-return issues, whether the prescriptive model is generalisable across other property investment decision-making groups or over time and whether it may lead to “good” decisions. Practical implications The prescriptive model proposed may contribute consistency and transparency to the decision-making process, if adopted by Australian unlisted property funds, potentially leading to better decisions. Social implications Greater consistency and transparency in property investment decision making by Australian unlisted property funds may lead to the optimal allocation of capital and greater investor confidence in the sector. Originality/value The findings comprise the first possible prescriptive model of the Australian unlisted property fund investment decision-making process, forming a basis for comparative investigation of that process adopted by other property investment decision-making groups such as Australian REITs and Australian retail property funds.