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Introduction
The establishment of the real estate investment trust (REIT) investment format is one of the significant developments in the property investment realm in Europe, with the proliferation of REITs in various European jurisdictions over the last decade (e.g. France (2003), Germany (2007), UK (2007), Italy (2007), Finland (2009), Spain (2009), Ireland (2013)) (EPRA, 2017a). Since many of these European REIT markets were established at the height of the 2007–2009 global financial crises (GFC), at the time when the global property market was under extreme pressure, they did not receive a sufficient and encouraging response from the investment community. However, rapid growth has been recorded in both the number of market participants as well as market capitalisation of REITs in the past five years. There are now in excess of 200 REITs in operation across 13 European REIT markets, with the European REITs market value standing at $224bn in 2017 (EPRA, 2017b). This sees the European REITs accounting for 13 per cent of the size of the global REIT universe. Figure 1 presents the significant growth in market capitalisation of various European REIT markets over August 2014–February 2018.
The Spanish REIT market (officially known as Sociedades Anonimas Cotizadas de Inversion Inmobiliaria (SOCIMI)) is an important and rapidly growing REIT market in Europe. Being introduced in 2009, a significant market traction was only achieved in 2013 when the legislation was further amended to provide uniformity with the rest of the developed global REIT markets. At September 2017, there are 47 active Spanish REITs with a total market capitalisation of $23bn (EPRA, 2017b), enabling local, European and international investors’ access to quality commercial property assets in Iberia and Europe through a liquid and transparent channel. Being the third largest European REIT market by market capitalisation, Spanish REITs are therefore seen as an important vehicle to revitalise the underperforming Spain commercial property market from the setbacks experienced since the GFC. Figure 2 illustrates the growth in market capitalisation for the Spanish REIT index over August 2014–February 2018, particularly highlighting the significant growth over 2016–2017. This market capitalisation reflects new REITs being introduced, as well as increasing REIT stock values.
The growing significance of REITs in Europe has attracted considerable research interest, with previous empirical studies have covered major...