A Factor Analysis
![The Convergence of Real Estate Cycles The Convergence of Real Estate Cycles](/fileadmin/_processed_/d/e/csm_trends01_11_3_449b246492.png)
The Convergence of Real Estate Cycles
German Economic Institute (IW)
A Factor Analysis
The diversification of risks is an essential aspect for property investors. One possibility to reduce portfolio risks is the acquisition of international property. However, globalization has induced a convergence of business cycles so that the differences in real estate cycles are questionable. Moreover, the monetary integration in Europe has brought in line nominal short-term interest levels for European investors. In this study the co-movement of office and housing cycles is tested for European markets by using a factor analysis. The results show that office cycles are highly synchronized. Housing markets are by contrast less integrated. Especially markets with a low homeownership rate, like the German, Dutch and Swiss market, stand out. The monetary integration has only a minor impact on cycles for offices and for housing.
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![The Convergence of Real Estate Cycles The Convergence of Real Estate Cycles](/fileadmin/_processed_/d/e/csm_trends01_11_3_449b246492.png)
The Convergence of Real Estate Cycles
German Economic Institute (IW)
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