Doctoral Degrees (Business Management)

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Browsing Doctoral Degrees (Business Management) by Author "Carstens, Margaretha"

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    Foreign investment and South African real estate investment trusts (REITs)
    (Stellenbosch : Stellenbosch University, 2018-12) Carstens, Margaretha; Freybote, J.; De Villiers, J. U.; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Business Management.
    ENGLISH SUMMARY : Real estate investment trusts (REIT) were introduced in South Africa in 2013 and follow the global REIT standard that originated in the US during the 1960s. The previously existing South African property investment vehicles, property unit trusts (PUTs) and property loan stocks (PLSs) were transformed to REITs. One of the main motivations for the introduction of REITs in South Africa was to make the listedproperty sector more attractive to foreign investors. This dissertation investigated three research questions in the context of foreign investments in SA REITs. First, it analysed whether SA REITs are attractive to foreign investors from a portfolio point of view. Using quadratic programming and the perspective of a foreign investor with US REIT investments, this study found that adding SA REITs to a portfolio of US REITs has diversification benefits in terms of a reduced portfolio variance and an increased Sharpe ratio. However, SA REITs with predominantly foreign holdings, particularly in Europe, have superior diversification benefits to foreign investors compared to SA REITs with predominantly South African holdings. Second, this dissertation investigated the macroeconomic, capital and property-market factors that drove foreign investments in SA REITs after May 2013 (REIT period) and in the alternative listedproperty vehicles prior to May 2013 (pre-REIT period). The results suggest that the impact of country-specific pull and non-country-specific push factors on foreign REIT investor behaviour changed over time, with push factors driving SA REIT investment in the REIT period and pull factors determining investment in the pre-REIT period. The impact of these factors on foreign REIT investments further differs for REIT market capitalisation (cap), with push factors driving large-cap REIT investments and pull factors affecting small-cap REIT investments. Thus, the attractiveness of SA REITs to foreign investors was not only driven by factors specific to South Africa, but also by factors specific to other countries, particularly the US and Europe. Third, this dissertation aimed to answer whether the introduction of REITs in South Africa has met the objective of attracting more foreign investors and improved the liquidity in the listed-property market. Results suggest that, following the introduction of REITs, foreign investors have indeed had a significant impact on REIT share liquidity as captured by activity measures (turnover and trading volume). On the other hand, the introduction of REITs has eliminated the negative impact foreign investors had on the friction dimensions of liquidity (bid-ask spread and price impact). The findings of the three chapters in this dissertation contribute to the literature on international REIT investment, and investment in emerging markets such as South Africa in particular. In addition, the study has implications for REIT investors, SA REITs and policymakers concerned with attracting foreign portfolio investment and developing listed-property markets. Other emerging economies that are contemplating the adoption of the REIT structure are likely to benefit from the increasing knowledge regarding foreign REIT investments, particularly with regard to liquidity implications and foreign investment drivers.