What does research know about real estate?
Behind many market “truths” there is research, and sometimes it says exactly the opposite. I have gathered here the studies and reports I keep coming back to: 20 for those who invest and 20 for those who build, in plain language.
In my day-to-day work I see deals one at a time. Good research shows the picture of thousands of deals, dozens of countries and hundreds of years. That is how you tell the story of a single case from a rule that repeats itself.
As someone who has moved between law, legislation and development, I believe a good decision rests on three things: an understanding of the law, an understanding of the market, and humility in the face of the data. Each study on the list adds something to one of them.
How to read the list: ranked from 1 to 20, from the research that most changes the way you think to reports that are useful for ongoing monitoring. For each item: what was found, why it matters to me, and what you will come away with. The summaries simplify for the sake of understanding; before relying on them, read the source.
20 studies every real estate investor should know
1. The Rate of Return on Everything, 1870-2015
Jordà, Knoll, Kuvshinov, Schularick, Taylor · Quarterly Journal of Economics, 2019
Full studyA study that examined the returns on equities, bonds and residential real estate in 16 countries over almost 150 years. The finding: over time, residential real estate delivered a return similar to that of equities, with much lower volatility, and a large part of the return came from rent.
Why it matters to me
This is the study I cite when someone says real estate “only goes up”. It shows that the strength of real estate lies in consistency and ongoing income, not only in appreciation.
What you will come away with
- Rent is a central part of the return, not a bonus
- Low volatility is an advantage that is hard to see in the short term
- A fair comparison between real estate and the capital markets
2. No Price Like Home: Global House Prices, 1870-2012
Knoll, Schularick, Steger · American Economic Review, 2017
Full studyA series of house prices in 14 advanced economies since 1870. Real house prices were almost flat until the middle of the 20th century and then rose sharply, and most of the increase came from rising land prices, not construction costs.
Why it matters to me
The practical conclusion: you pay for location. What drives value over time is the land underneath, so checking the location and the rights in the land matters more than the apartment's finishes.
What you will come away with
- Land value is the engine of price increases
- Rapid price growth is a relatively new phenomenon
- Location and rights come before finishes
3. A Long Run House Price Index: The Herengracht Index, 1628-1973
Piet Eichholtz · Real Estate Economics, 1997
Full studyA price index of houses along the Herengracht canal in Amsterdam, spanning about 350 years. Over the very long term, real prices barely rose, but there were very long waves of rises and falls.
Why it matters to me
This study teaches humility. Even at the most prestigious address there are long periods of decline, so timing and the ability to hold over time matter.
What you will come away with
- Even luxury properties go through long cycles
- Being able to hold through a downturn
- Do not build a deal on appreciation alone
4. The Efficiency of the Market for Single-Family Homes
Karl Case, Robert Shiller · American Economic Review, 1989
Full studyThe study that gave rise to the Case-Shiller index. It found that the housing market is not efficient: price changes tend to continue in the same direction, so a rise leads to a rise and a fall leads to a fall.
Why it matters to me
What it means for an investor: markets have momentum, so it is worth identifying what stage of the cycle the market is in before entering, not just today's price.
What you will come away with
- The housing market has momentum
- Today's price is influenced by yesterday's trend
- It is important to understand the stage of the cycle
5. What Have They Been Thinking? Homebuyer Behavior in Hot and Cold Markets
Case, Shiller, Thompson · Brookings Papers on Economic Activity, 2012
Full studySurveys of homebuyers over many years. Buyers tend to assume that a recent trend will continue and to expect unrealistic long-term price rises, especially in a hot market.
Why it matters to me
I see it in conversations with investors: the decision rests on what happened in the last two years. The research gives you the language to distinguish between an expectation and a data point.
What you will come away with
- Buyers' expectations tend to be too optimistic
- A hot market generates unrealistic assumptions
- Build a forecast on data, not on a feeling
6. Loss Aversion and Seller Behavior: Evidence from the Housing Market
David Genesove, Christopher Mayer · Quarterly Journal of Economics, 2001
Full studySellers whose property is worth less than they paid ask for a higher price, get a slightly higher price, but sell much more slowly. Loss aversion changes market behavior.
Why it matters to me
In a negotiation abroad, too, it is worth knowing what the seller paid. It explains why they are digging in, and sometimes where there is room for flexibility.
What you will come away with
- Loss aversion affects asking prices
- Why certain properties get “stuck” on the market
- Information on the seller's purchase price is a negotiating tool
7. Home Away from Home? Foreign Demand and London House Prices
Cristian Badarinza, Tarun Ramadorai · Journal of Financial Economics, 2018
Full studyThe study showed that demand from foreign investors, driven by risk events in their home countries, raises prices in London neighborhoods that have ties to those countries.
Why it matters to me
Israeli investors are also “foreign demand” in the destination countries. It is worth understanding when demand in a market relies on foreigners, and what happens when they stop.
What you will come away with
- Foreign demand can move local prices
- Check who else is buying in the neighborhood and why
- Dependence on foreign demand is a risk factor
8. Superstar Cities
Joseph Gyourko, Christopher Mayer, Todd Sinai · American Economic Journal: Economic Policy, 2013
Full studySought-after cities where it is hard to add new housing enjoy faster-than-average price growth for decades and become more and more expensive.
Why it matters to me
The important question is not only “is the city in demand”, but “can more be built there”. Limited supply and strong demand are the combination that holds value.
What you will come away with
- Strong demand + limited supply = value over time
- Check how easy it is to build in the area
- Not every popular city is a “superstar” city
9. Owner-Occupied Housing as a Hedge Against Rent Risk
Todd Sinai, Nicholas Souleles · Quarterly Journal of Economics, 2005
Full studyOwning a home protects against swings in rent. In places where rents are volatile, people are willing to pay more for ownership.
Why it matters to me
This explains why in some markets the ownership rate is high and why renting there is less stable. Important information when choosing a country and an area for renting out.
What you will come away with
- The difference between an owners' market and a renters' market
- Rent volatility affects prices
- Match the strategy to the market structure
10. Betting the House
Òscar Jordà, Moritz Schularick, Alan Taylor · Journal of International Economics, 2015
Full studyA historical study of 17 countries: mortgage credit booms are linked to financial crises and deeper recessions. Housing prices and interest rate conditions are tied to each other.
Why it matters to me
Leverage is the double-edged sword of real estate. The study is a reminder to check the state of credit in the destination country, not just apartment prices.
What you will come away with
- A credit boom is a warning sign
- Interest rates and prices move together
- Moderate leverage protects in times of crisis
11. House of Debt
Atif Mian, Amir Sufi · University of Chicago Press, 2014
Full studyA book based on the authors' research: household debt was a central factor in the 2008 crisis, and the losses fell mainly on leveraged homeowners.
Why it matters to me
Anyone financing a property abroad with a mortgage needs to understand the risk when prices fall: the equity is eroded first.
What you will come away with
- How leverage magnifies losses
- Why equity is hit first
- How much leverage is too much for you
12. House Price Synchronization: What Role for Financial Factors?
IMF · Global Financial Stability Report, April 2018, Chapter 3
Full studyThe IMF found that housing prices in different countries move together more and more, partly because of global financial conditions such as interest rates and capital flows.
Why it matters to me
Diversifying across countries is still worthwhile, but it protects less than people think. Global interest rates affect all the markets we work in.
What you will come away with
- Markets are more correlated than in the past
- Global interest rates affect everyone
- Geographic diversification is not full insurance
13. International Evidence on Real Estate as a Portfolio Diversifier
Martin Hoesli, Jon Lekander, Witold Witkiewicz · Journal of Real Estate Research, 2004
Full studyA multi-country study that found that real estate, both domestic and international, adds diversification to a portfolio of equities and bonds.
Why it matters to me
This is the academic basis for a question many clients ask: why invest in real estate abroad at all. The answer is diversification, provided it is done properly.
What you will come away with
- Real estate adds diversification to a portfolio
- International diversification adds another layer
- Transaction costs can eat up the advantage
14. Why Have Housing Prices Gone Up?
Edward Glaeser, Joseph Gyourko, Raven Saks · American Economic Review (Papers & Proceedings), 2005
Full studyThe study argued that the price rise in expensive markets stemmed mainly from restrictions on new construction rather than from rising construction costs.
Why it matters to me
Before buying, it is worth asking: what stops others from building more here? If the answer is “nothing”, the price rise is vulnerable.
What you will come away with
- Building regulation holds up prices
- Construction costs alone do not explain price
- Check the planning policy in the area
15. Global House Price Index
Knight Frank · quarterly
Full studyA quarterly ranking of house price changes across many countries. A quick source for comparing markets.
Why it matters to me
A useful tracking tool, not a substitute for a local check. I treat it as a first map, not as the bottom line.
What you will come away with
- A quick comparison between countries
- Identifying regional trends
- Cross-check with local data
16. Emerging Trends in Real Estate Europe
PwC & Urban Land Institute · annual
Full studyAn annual survey of industry professionals in Europe: which cities and sectors are expected to improve, and what is worrying investors.
Why it matters to me
It is a view of what professionals think, and that influences capital flows. It is worth knowing the consensus, even if in the end you choose differently.
What you will come away with
- The industry consensus on cities and sectors
- Which risks worry institutional investors
- Ideas for markets worth examining
17. The Wealth Report
Knight Frank · annual
Full studyAn annual report on the world of wealth and luxury real estate: prime property prices in major cities, and the investment trends of high-net-worth individuals.
Why it matters to me
Especially useful for anyone looking at luxury or holiday properties. It shows where major wealth holders are looking.
What you will come away with
- Trends in the luxury property market
- Comparing cities by prime prices
- A snapshot of the preferences of high-net-worth individuals
18. Residential Property Price Statistics
Bank for International Settlements (BIS) · database
Full studyA database of house price series from official sources in dozens of countries, in a format that allows comparison.
Why it matters to me
When I want an official figure rather than a marketer's forecast, this is one of the first sources.
What you will come away with
- Official data for comparing countries
- Checking long-term trends
- Cross-checking sellers' claims
19. The Global Real Estate Transparency Index
JLL · biennial
Full studyAn index that ranks countries and cities by real estate market transparency: data, regulation, land registration, governance and transaction processes.
Why it matters to me
In a less transparent market the legal risk is higher, so due diligence needs to go deeper. The index helps you know how much caution is needed.
What you will come away with
- How transparent the destination market is
- Where the legal risk is higher
- Match the depth of the review to the market
20. Irrational Exuberance
Robert Shiller · Princeton University Press (third edition, 2015)
Full studyThe Nobel laureate's book on market bubbles, including chapters on the housing market and long-term historical data on house prices.
Why it matters to me
Required reading before entering a “hot” market. It teaches you to identify the story driving the market, and to ask whether it holds up.
What you will come away with
- How bubbles form
- The role of stories in the market
- Signs of a market that has detached from the fundamentals
20 studies every real estate developer should know
1. The Economic Implications of Housing Supply
Edward Glaeser, Joseph Gyourko · Journal of Economic Perspectives, 2018
Full studyA review of the link between housing supply, regulation and prices: where it is hard to build, prices are much higher than construction costs; where it is easy to build, they are close to them.
Why it matters to me
This is exactly every developer's question: where is the gap between the sale price and the construction cost large enough, and why.
What you will come away with
- The gap between price and cost is the source of profit
- Regulation creates the gap
- Choose markets according to supply constraints
2. The Geographic Determinants of Housing Supply
Albert Saiz · Quarterly Journal of Economics, 2010
Full studyGeography (water, slopes) and regulation determine how easy it is to add housing in a city. In cities with limited supply, prices respond more strongly to demand.
Why it matters to me
Before choosing a city, it is worth understanding its physical limits. They determine the competition you will face in five years.
What you will come away with
- Geography limits supply
- A market with limited supply is more volatile
- Assess future competition
3. Underestimating Costs in Public Works Projects: Error or Lie?
Bent Flyvbjerg, Mette Holm, Søren Buhl · Journal of the American Planning Association, 2002
Full studyA study of hundreds of infrastructure projects that found that almost 9 out of 10 went over budget, and that underestimating costs is a recurring pattern, not an accident.
Why it matters to me
The study deals with infrastructure, but the lesson applies to every project: the first budget is almost always optimistic. That is why a contingency reserve is not a luxury.
What you will come away with
- Budget overruns are the rule, not the exception
- Build a real reserve
- Check budgets against similar completed projects
4. The Wharton Residential Land Use Regulatory Index
Joseph Gyourko, Albert Saiz, Anita Summers · Urban Studies, 2008
Full studyAn index measuring the stringency of land-use and building regulation in local jurisdictions in the US, based on a broad survey. Strict regulation is associated with higher prices and less construction.
Why it matters to me
The idea matters in every country: before buying land, map how hard it is to get a permit from that authority. It determines the timeline and the risk.
What you will come away with
- Regulation varies greatly between authorities
- The permit timeline is part of the cost
- Map the authority before the land
5. Housing Constraints and Spatial Misallocation
Chang-Tai Hsieh, Enrico Moretti · American Economic Journal: Macroeconomics, 2019
Full studyBuilding restrictions in productive US cities prevented workers from moving to them and, according to the study, significantly slowed economic growth.
Why it matters to me
Cities with many jobs and little housing are an opportunity for a developer, but also a political arena. It is worth understanding both sides.
What you will come away with
- Employment demand without supply = price pressure
- Housing is a political issue
- Identify cities that lack housing
6. Why Is Manhattan So Expensive? Regulation and the Rise in Housing Prices
Edward Glaeser, Joseph Gyourko, Raven Saks · Journal of Law and Economics, 2005
Full studyThe study showed that apartment prices in Manhattan are much higher than the cost of building an additional floor, and explained the gap by regulation that limits construction.
Why it matters to me
The concept of the “regulatory tax” helps estimate what a building permit is worth. Sometimes the real asset you are buying is the rights, not the land.
What you will come away with
- What a building right is worth
- The gap between price and cost as a measure of regulation
- Price rights separately from the land
7. Urban Land Prices Under Uncertainty
Sheridan Titman · American Economic Review, 1985
Full studyA study that showed that vacant land has an “option value”: under uncertainty, waiting to build can be worth money, so high uncertainty slows construction.
Why it matters to me
Not every plot of land needs to be built on immediately. Sometimes the smart decision is to buy, plan and wait for the right moment.
What you will come away with
- Land has option value
- Uncertainty encourages waiting
- The timing of construction is an economic decision
8. The Strategic Exercise of Options: Development Cascades and Overbuilding
Steven Grenadier · Journal of Finance, 1996
Full studyThe model explains why developers sometimes all build at once, even when demand is weakening: the fear that a competitor will get there first creates a “cascade” of construction and oversupply.
Why it matters to me
When everyone builds in the same area at the same time, the question is who will sell last. It is worth checking how many competing projects are in the pipeline.
What you will come away with
- Why oversupply arises
- Check the pipeline of competing projects
- Beware of a market everyone is rushing into
9. Real Estate "Cycles": Some Fundamentals
William Wheaton · Real Estate Economics, 1999
Full studyAn explanation of real estate cycles: construction responds to demand with a lag, so new supply sometimes enters the market just as demand is weakening.
Why it matters to me
In a two- to three-year project, the market on the day of handover may be very different from the market on the day the land was bought. You need to plan for both.
What you will come away with
- The construction lag creates cycles
- Plan for market conditions at handover
- Use pre-sales to reduce risk
10. Real Estate Cycles and Their Strategic Implications for Investors and Portfolio Managers in the Global Economy
Stephen Pyhrr, Stephen Roulac, Waldo Born · Journal of Real Estate Research, 1999
Full studyA review of real estate cycles in the global economy and what they mean for decision-making: when to buy, build, hold and sell.
Why it matters to me
A developer working in several countries needs to think about several cycles in parallel. The research provides a framework for that.
What you will come away with
- Different cycles in different markets
- Matching strategy to the stage of the cycle
- Thinking globally about timing
11. The Impact of Supply Constraints on House Prices in England
Christian Hilber, Wouter Vermeulen · Economic Journal, 2016
Full studyThe study found that regulatory restrictions on construction in England raised housing prices significantly, more than physical constraints did.
Why it matters to me
More proof that in Europe, planning is the key variable. Understanding the planning system in the destination country is worth more than any market report.
What you will come away with
- Regulation raises prices in Europe
- The planning system is both a risk and an advantage
- Learn the permit route in advance
12. Tall Buildings and Land Values
Gabriel Ahlfeldt, Daniel McMillen · Review of Economics and Statistics, 2018
Full studyA study of Chicago spanning more than a hundred years: construction costs rise with height, and building tall pays only when the land price is high enough.
Why it matters to me
The question of height is an economic question, not just a planning one. Before asking for more floors, it is worth checking that they really increase the profit.
What you will come away with
- Cost per square meter rises with height
- When building tall pays off
- Match density to the land price
13. Doing Well by Doing Good? Green Office Buildings
Piet Eichholtz, Nils Kok, John Quigley · American Economic Review, 2010
Full studyOffice buildings with a green building certification were leased and sold at higher prices than similar buildings without one.
Why it matters to me
In Europe, sustainability and energy requirements are becoming stricter. Green building is no longer just a value; it is also a financing and sales consideration.
What you will come away with
- Green building can justify a higher price
- Banks and investors price in sustainability
- Check local energy requirements
14. Green Noise or Green Value? Measuring the Effects of Environmental Certification on Office Values
Franz Fuerst, Patrick McAllister · Real Estate Economics, 2011
Full studyAnother study that found a premium in rent and sale price for buildings with an environmental certification.
Why it matters to me
Two independent studies with a similar conclusion is already a pattern. It is worth pricing this premium into the feasibility study.
What you will come away with
- A premium for environmental certification
- Include the premium in the initial feasibility report
- Weigh the cost of certification against the benefit
15. Reinventing Construction: A Route to Higher Productivity
McKinsey Global Institute · 2017
Full studyA report showing that the construction sector lags behind the rest of the economy in productivity, and proposing seven areas for improvement: regulation, contracts, design, procurement, execution, technology and workforce.
Why it matters to me
Most of a developer's profit is determined in the contracts and in management. The report helps you think about where you can save without compromising quality.
What you will come away with
- Where efficiency is lost in construction
- The role of contracts in a project's success
- Ideas for improving project management
16. International Construction Market Survey
Turner & Townsend · annual
Full studyAn annual survey of construction costs per square meter in many cities around the world, trends in material and labor costs, and a comparison between markets.
Why it matters to me
A good reference point before receiving quotes from local contractors. If a quote is very far from the range, you need to ask why.
What you will come away with
- Construction cost ranges by city
- Trends in material and labor costs
- A reasonableness check on contractor quotes
17. The Global Real Estate Transparency Index
JLL · biennial
Full studyAn index that ranks countries by real estate market transparency: data, regulation, registration, governance and transaction processes.
Why it matters to me
For a developer, low transparency means more time, more consultants and more risk. It is worth pricing that into the timeline and the budget.
What you will come away with
- Transparency affects the project's duration
- More checks in a less transparent market
- Price in regulatory risk
18. Micro-Foundations of Urban Agglomeration Economies
Gilles Duranton, Diego Puga · Handbook of Regional and Urban Economics, 2004
Full studyA review of the reasons people and businesses concentrate in cities: shared infrastructure, a better match between workers and employers, and learning.
Why it matters to me
Whoever understands why people want to live near other people understands what creates demand for their project.
What you will come away with
- Why cities attract people and businesses
- The link between employment and housing demand
- Choose a location near growth engines
19. Housing Supply Price Elasticities Revisited
Michael Ball, Geoffrey Meen, Christian Nygaard · Journal of Housing Economics, 2010
Full studyA cross-country comparison of how far housing supply responds to rising prices. The study found large differences between countries.
Why it matters to me
In countries where supply responds slowly, a developer who finishes fast benefits. In countries where it responds quickly, the competition arrives quickly.
What you will come away with
- Differences between countries in supply response
- How this affects competition
- Match the project's pace to the market
20. Regulation and Housing Supply
Joseph Gyourko, Raven Molloy · Handbook of Regional and Urban Economics, Vol. 5, 2015
Full studyA comprehensive review of the research on regulation and housing supply: how regulation is measured, and its effect on prices, construction and the shape of cities.
Why it matters to me
This review sums up almost everything you need to know about the link between law, planning and profitability. For me, this is where law and development meet.
What you will come away with
- A review of the entire literature in the field
- Ways to measure regulation
- The effects on price, construction and the city
Want to understand what these studies mean for your deal or project? In a 30-minute introductory call, we will go over the market and the legal questions together.
The summaries on this page simplify research findings for general understanding and are not investment advice. Before relying on a finding, read the full source. We have no commercial relationship with the researchers, the institutions or the publishers.
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