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Governmental Restrictions and Real Estate Investor Risk Perception

We investigate the impact of governmental restrictions on the short-term risk perception, as proxied by the going-in cap rate, of investors in regional and neighborhood shopping centers. We use the COVID-19 pandemic as a natural experiment and proxy for the length and severity of COVID-19 restrictio...

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Autores principales: Kaiser, Carina, Freybote, Julia, Schäfers, Wolfgang
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Springer US 2023
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10040917/
http://dx.doi.org/10.1007/s11146-023-09947-y
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author Kaiser, Carina
Freybote, Julia
Schäfers, Wolfgang
author_facet Kaiser, Carina
Freybote, Julia
Schäfers, Wolfgang
author_sort Kaiser, Carina
collection PubMed
description We investigate the impact of governmental restrictions on the short-term risk perception, as proxied by the going-in cap rate, of investors in regional and neighborhood shopping centers. We use the COVID-19 pandemic as a natural experiment and proxy for the length and severity of COVID-19 restrictions with the political affiliation of state governors. Using a sample of 40 metropolitan statistical areas (MSAs) across 27 states over the period of 2018 to 2021, we find that for states with Republican governors, which proxy for shorter and fewer COVID-19 restrictions, investors in regional malls required a lower going-in cap rate in the pandemic period than for states with Democratic governors. This effect does not exist for neighborhood shopping centers, whose tenants were not as affected by COVID-19 restrictions. Robustness checks suggest that our findings can be explained with mask mandates as one type of governmental restrictions, and that COVID-19 related restrictions do not impact the long-term risk perception of retail real estate investors. We furthermore find that the political attitudes of an MSA have an impact on investor risk perception.
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spelling pubmed-100409172023-03-27 Governmental Restrictions and Real Estate Investor Risk Perception Kaiser, Carina Freybote, Julia Schäfers, Wolfgang J Real Estate Finan Econ Article We investigate the impact of governmental restrictions on the short-term risk perception, as proxied by the going-in cap rate, of investors in regional and neighborhood shopping centers. We use the COVID-19 pandemic as a natural experiment and proxy for the length and severity of COVID-19 restrictions with the political affiliation of state governors. Using a sample of 40 metropolitan statistical areas (MSAs) across 27 states over the period of 2018 to 2021, we find that for states with Republican governors, which proxy for shorter and fewer COVID-19 restrictions, investors in regional malls required a lower going-in cap rate in the pandemic period than for states with Democratic governors. This effect does not exist for neighborhood shopping centers, whose tenants were not as affected by COVID-19 restrictions. Robustness checks suggest that our findings can be explained with mask mandates as one type of governmental restrictions, and that COVID-19 related restrictions do not impact the long-term risk perception of retail real estate investors. We furthermore find that the political attitudes of an MSA have an impact on investor risk perception. Springer US 2023-03-27 /pmc/articles/PMC10040917/ http://dx.doi.org/10.1007/s11146-023-09947-y Text en © The Author(s) 2023 https://creativecommons.org/licenses/by/4.0/Open AccessThis article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/ (https://creativecommons.org/licenses/by/4.0/) .
spellingShingle Article
Kaiser, Carina
Freybote, Julia
Schäfers, Wolfgang
Governmental Restrictions and Real Estate Investor Risk Perception
title Governmental Restrictions and Real Estate Investor Risk Perception
title_full Governmental Restrictions and Real Estate Investor Risk Perception
title_fullStr Governmental Restrictions and Real Estate Investor Risk Perception
title_full_unstemmed Governmental Restrictions and Real Estate Investor Risk Perception
title_short Governmental Restrictions and Real Estate Investor Risk Perception
title_sort governmental restrictions and real estate investor risk perception
topic Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10040917/
http://dx.doi.org/10.1007/s11146-023-09947-y
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