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117 Real Estate Essay Topic Ideas & Examples

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Real estate is a vast and diverse industry that encompasses everything from buying and selling properties to property management and development. There are many fascinating topics within the field of real estate that can be explored through essays. If you are a student or professional in the real estate industry looking for essay topic ideas, you have come to the right place. In this article, we have compiled a list of 117 real estate essay topic ideas and examples to inspire your writing.

• The impact of the COVID-19 pandemic on the real estate market
• The role of technology in the future of real estate
• The importance of sustainable development in real estate
• The pros and cons of investing in commercial real estate
• The impact of gentrification on urban neighborhoods
• The benefits of using a real estate agent when buying or selling a home
• The challenges of property management in a competitive market
• The rise of co-living spaces in major cities
• The impact of Airbnb on the traditional hotel industry
• The role of real estate in economic development
• The benefits of investing in real estate as a long-term strategy
• The impact of zoning laws on property values
• The benefits of investing in real estate crowdfunding platforms
• The challenges of affordable housing in major cities
• The impact of interest rates on the real estate market
• The role of real estate developers in shaping urban landscapes
• The benefits of investing in real estate investment trusts (REITs)
• The challenges of property flipping in a competitive market
• The impact of climate change on real estate values
• The benefits of investing in rental properties
• The challenges of managing a multi-family property
• The impact of foreign investment on the real estate market
• The benefits of investing in vacation rental properties
• The challenges of buying a foreclosed property
• The impact of historic preservation on property values
• The benefits of investing in mixed-use developments
• The challenges of property maintenance in a rental property
• The impact of urban sprawl on property values
• The benefits of investing in student housing properties
• The challenges of investing in a fixer-upper property
• The impact of property taxes on real estate values
• The benefits of investing in real estate as a retirement strategy
• The challenges of investing in a commercial property
• The impact of smart home technology on property values
• The benefits of investing in a vacation home
• The challenges of investing in a rental property out of state
• The impact of historic tax credits on property values
• The benefits of investing in industrial properties
• The challenges of investing in a luxury property
• The impact of transportation infrastructure on property values
• The benefits of investing in a short-term rental property
• The challenges of investing in a property with environmental concerns
• The impact of energy efficiency on property values
• The benefits of investing in a co-working space
• The challenges of investing in a property with zoning issues
• The impact of walkability on property values
• The benefits of investing in a mixed-income housing development
• The challenges of investing in a property with title issues
• The impact of green building certifications on property values
• The benefits of investing in a property with historic charm
• The challenges of investing in a property with structural issues
• The impact of transit-oriented development on property values
• The benefits of investing in a property with waterfront views
• The challenges of investing in a property with a high vacancy rate
• The impact of LEED certification on property values
• The benefits of investing in a property with a strong rental market
• The challenges of investing in a property with high property taxes
• The impact of mixed-use developments on property values
• The benefits of investing in a property with a strong school district
• The challenges of investing in a property with a high crime rate
• The impact of green roofs on property values
• The benefits of investing in a property with a strong job market
• The challenges of investing in a property with poor access to public transportation
• The impact of walkable neighborhoods on property values
• The benefits of investing in a property with a strong sense of community
• The challenges of investing in a property with high HOA fees
• The impact of urban agriculture on property values
• The benefits of investing in a property with a low cost of living
• The challenges of investing in a property with high insurance costs
• The impact of community gardens on property values
• The benefits of investing in a property with a low crime rate
• The challenges of investing in a property with high maintenance costs
• The impact of public art on property values
• The benefits of investing in a property with good schools
• The challenges of investing in a property with strict zoning laws
• The impact of bike lanes on property values
• The benefits of investing in a property with good walkability
• The challenges of investing in a property with strict building codes
• The impact of public parks on property values
• The benefits of investing in a property with access to public transportation
• The impact of mixed-income housing on property values

Whether you are a student looking for a research topic or a professional looking to expand your knowledge, these real estate essay topic ideas and examples can help you explore the many facets of the industry. From the impact of technology on the future of real estate to the challenges of investing in a fixer-upper property, there are endless possibilities for exploration within the field of real estate. So pick a topic that interests you, do some research, and start writing your next real estate essay today!

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131 Real Estate Essay Topic Ideas & Examples

Looking for interesting real estate topics to write about? This field is very exciting and worth exploring!

🔥 Real Estate Topics to Write About in 2024

🏆 best real estate essay examples & topic ideas, 👍 good real estate essay topics, ⭐ simple & easy real estate essay titles, ❓ real estate research questions.

In your real estate essay, you might want to focus on its classification or compare some of its types. Another idea is to discuss the issues of management, economics, or law in the sphere of real estate. Whether you’re planning to write an argumentative essay or reflection paper, our article will help. Here you’ll find real estate research topics and questions that will suit any project. Some real estate essay examples are added to inspire you even more!

• Housing market during the pandemic
• Buyer demand in real estate: the trends for 2022-2024
• Moving into a new house: things to consider
• Why is the real estate market blooming in the pandemic?
• Global housing market
• Residential real estate and its types
• Investing in real estate: what to choose in 2022?
• The history of real estate investment
• Commercial real estate: the new trends
• Real estate markets: the overview
• Real Estate Industry’s Macroenvironmental Analysis In analyzing the external environment of the Real Estate Industry, this report utilized two business assessment tools known as the PESTEL business model and the Five Force business model. In the real estate business, competition […]
• Real Estate Development: Business Continuity Plan It is expected that all the Real Estate Development’s sites will implement the proposed plan and take the proposed measures in order to minimize the risks of operational disruptions and ensure a quick recovery in […]
• Real Estate Marketing and Advertising The advertising involves all parties that are interested into the sector of real estate marketing because sellers need to sell whereas buyers need to buy and a link is the advertising as it provides sellers […]
• Historical Development of Real Estate in Atlanta, GA Atlanta city is the capital of the state of Georgia as well as the cultural and economic capital of the Atlanta Metropolitan area and is home to 420,003 people as per the 2010 census.
• Real Estate Contract Documents A contract is an agreement that is intended to be enforceable in a court of law; as such, it must be drafted carefully to ensure that issues that might arise are easily clarified through the […]
• Real Estate Market in India The primary aim of the paper is to analyze the real estate industry in India through the example of the Urban Plus Company using Porter’s Five Forces and the PESTEL framework.
• Dar Al Arkan as a Real Estate Leader in Saudi Arabia Come 2007, the company had its shares listed in the country’s stock exchange market and has continued to increase its capital through this platform The recent economic boom experienced in the country has led to […]
• Ethics in Real Estate Depicting the victory of ethics over immorality, Sam Foster manages to express his idea of the possibility that the real estate business, and the human life on the whole, can be ethical in their essence.
• Real Estate Situation in Manhattan and American Crisis According to the encyclopedia Wikipedia, Manhattan is the commercial, financial, and cultural center of the United States and, to varying extents, of the world.
• The Real Estate Registration: Key Issues The process of distributing the lump sum purchase price between the land and the building is a critical point in the real estate registration. For the controller, the value of this scam is to increase […]
• Selling Price Analysis for a Real Estate Company For the analysis, a set of 1000 data containing information about the region where the dwelling was sold, the listing price, and the square footage.
• Real Estate Development/Investment: ADU From the beginning to the end of the development process, engineers buy property, arrange to finance housing agreements and build or construct projects.
• Comparing Two Real Estate Lease Agreements: Similarities and Differences This paper contains all the necessary points of agreement between these two lyceums, such as the obligations of the parties the conditions for concluding and terminating a real estate lease agreement.
• A Real Estate Strategic Plan Analysis The strategic plan of real estate companies is a significant part of the organizational assessment and formulation of priorities. Hence, it does not tackle the issues and opportunities for the growth of human resources in […]
• Southeastern Land Fund Inc. vs. Real Estate World Inc. According to the Court of Appeals, a condition in a real estate sales contract allowing for the payment of earnest money should not be regarded as a provision for liquidated damages.
• The 4122 Wycliff Real Estate Investment In this case, the purchase price is estimated to be $400,000, with a deposit of $55,500, an interest rate of 5%, and a monthly mortgage payment of $1,849.35.
• Risk Management in a Real Estate Developer Company: Evergrande Group Over the years, the company’s success has played an important role in the growth and sustainability of the Chinese economy. The company faces opportunity risks as it ventures to invest in various projects.
• Average Cost of Real Estate in the Pacific Region The objective of this test is to determine if the average sales price for the real estate prices differs from the estimated value of $275.
• Exposition for the Application to Master in Construction and Real Estate Management at HTW Berlin Countries around the world have realized that the best way of managing the competitiveness of the market is to successfully government and private projects completed in time and as per the expectations.
• The Role of Real Estate: The Case of the Kingdom of Saudi Arabia There is much support from the private and public sector to support sustainability. The growth of the real estate sector contributes to the growth of the economy.
• Summary of the Interview About Real Estate With the Expert in This Area It is not always possible to stick to the plan; thus, the business model should be flexible and highly adaptive. The biggest challenge is to find clients and establish a local brand image at the […]
• Mortgage and Finance in the Real Estate Industry The arguments that have been made in the article pertain to the refinement of rules and procedures provided to the mortgage lenders by the government for licensing, legalizing their operations, and for controlling the spread […]
• Buying Property in Real Estate Investment The fall in the sterling also made foreign investors to have the notion that the assets in the UK are relatively cheaper.
• Current Recession and the Real Estate Industry in the US The performance of the housing industry has fallen after the recession. In the United States, most industries have recovered, but the housing industry is yet to recover from the recession.
• AvalonBay Communities’ Real Estate Investment Trust The company provides rent apartment, office complex, and buildings for individual, organizations, government agencies, and corporate institutions in the United States.
• An Ambitious Real Estate Investment Plan The project has the potential to succeed and also fails to owe to the issues and the circumstances it is encountering.
• The Elements of a Contract With Regard to Real Estate The elements of a contract with regard to real estate are analyzed in this essay. Recently, I entered into a contract with the seller of a strategically located house in Nevada.
• Real Estate Management – Analysis and Valuation The financial bubble followed the economic boom and the bubble busted when the United States financial system failed, this led to the collapse of the mortgage market and a turnaround of the home boom in […]
• Saudi Arabian Real Estate Industry Analysis This has assured the kingdom of again in their competitive outlook at the international front, thus enjoying a better foreign real estate investment attraction over most nations in the world.
• Stephenson Real Estate Recapitalization Therefore, the key aim of the paper is to analyze the opportunity of recapitalization, the necessity to issue debts and shares, as well as analyze the benefits of such recapitalization.
• Real Estate Development Firms and Their Aspects The goods that enter the warehouse or rather the inbound goods are safeguarded in the warehouse until the outbound process for these goods is initiated. The warehousing process involves controlling the flow of goods in […]
• Commercial Real Estate Finance And since there is a gap in the industry, if we began our efforts to design and implement such a system now, we can have a very powerful tool of competitive advantage in the market […]
• Asset Allocation vs. Entrepreneurial Decisions in Real Estate Investment The determination of the return series in real estate markets cannot be similar to that in stocks or bonds because the earlier involves the need to manage an investment property and has a special form […]
• Decision Theory and Real Estate Investment The models of judgment so involved in the making of the deliberate and usually rational choice may be explained by the decision theory.
• Buying a Home: Trends and Strategies in the Real Estate Industry The uniqueness of the borrower coupled with rules and principles of the financier presents the need for deliberation in brokering the best deal possible.
• The Real Estate Mortgage Market and Laws in Saudi Arabia Saudi Arabia has always been one of the highest economically growing country in the world and this factor has been fuelled by the presence of petroleum.
• Real Estate Market Conditions in Sacramento Generally, the current real estate market conditions in the area of apartment sales and rent are far from equilibrium according to the real estate cycle.
• MSN Real Estate: Company Analysis The real estate market is considered to be one of the most important of the United States economy. At this stage the company has three main target groups, the primary of which is of students […]
• Real Estate Branding: Effects and Functions Real estate branding is an attempt by a firm to step out of the ordinary and differentiate from a huge set of competitors.
• Ethical Dilemmas: Morgan Brown Real Estate Company In the case of the latter ethical dilemma, it would be more effective and honest for this particular company to accept the fact that favouring one client over the other could lead to a tarnished […]
• Real Estate Management: Real Estate Purchase Decisions The study went further to recommend a property by the name of high-rise found on the outskirts of the city of California based on the fact that it was insured by AIG group, American largest […]
• Real Estate as an Investment The first one is from the e-zine of About.com and is titled “Is Real Estate a Good Investment” and the second article is from The New York Times publications titled “Bucking the Tide, Real Estate […]
• Real Estate Housing Bubble The rise in prices was mainly due to a robust growth in demand for housing along with scarce supple because of a shortage in availability of land, mostly in the urban areas, and possibly, fragile […]
• Real Estate Industry: Current Trends A well functioning, affordable housing system is a vital element in a nation’s infrastructure at least as important as a road and provides to the efficiency of the economy.
• Real Estate Business in Berlin. Personal Internship After the fall of the Berlin Wall in the real estate market of Germany it is possible to observe a surprising situation: prices in the east, formerly socialist territories, did not grow for a long […]
• Wintotal and Appraiser’s Toolbox: Real Estate Appraisal Practices The powerful analytical processor of appraisal software is a multifactor algorithm with a powerful decision-making platform, which defines the accuracy of calculations and relevance of report data.
• Endangered Species Act’s Effects on Real Estate S; the ability to obtain permits, entitlement, and approvals necessary for the development of real projects, and unexpected delays in the timing thereof; and implementation of laws as Endangered Species Act.
• Asbestos and Effects on Real Estate Development Because of these hazards, use of asbestos in industry is regulated in the United States to protect workers and many uses of the material are banned entirely.
• Facility Management System in Real Estate Department The primary purpose of the department investing into a modernized facility management system is to improve the quality and capabilities of the service.
• Global Financial Crisis and Real Estate Issues The central point of the argument is that the real estate market in the US and the policy called “trailer park lending” was the main reason for the worldwide economic crisis.
• Union Street Business Association Real Estate Firm’s Plan USBA plans to hire human resource firms to get the best candidates to fill the positions required to staff the organization.
• Real Estate Research and Survey Results This will enable researchers to develop the relation between the category of homes and the level of income. The level of measurement of this question will be ordinal.
• Real Estate Research Variables and Hypotheses It is possible to define this variable in the following way: price is the amount of money to be paid to become an owner of the house and to start living in it.
• East Asian Economy Analysis: Thailand’s Real Estate Bubble Economists believe that the rise and fall in the prices of assets have a strong impact on the real economies of most countries. The change in prices reflects the nature of economic activities taking place […]
• Housing as a Social Asset in the Real Estate Market The financial situation in a household directly reflects the well-being and social interaction of individuals. Housing physically provides a space for social interaction and the building of social support mechanisms in a community.
• Real Estate Investment Decisions Real estate is a complex investment that requires an investor to have a good comprehension of the most significant aspects that often influence one’s ability to make decisions that are well informed and intelligent enough.
• Toys “R” Us Company’s Real Estate Collapse It is evident that the company, similar to many in the retail industry, failed to accommodate the changing trends and consumer behaviors.
• Real Estate Industry in the UAE: Meraas Holdings Based in the capital, Dubai, the company was founded in 2007 as a way of enhancing the potential and prestige of the city of Dubai.
• California Real Estate Discrimination These acts include the real estate license law, the Fair Employment and Housing Act, the Housing Financial Discrimination Act, and the Unruh Civil Rights Act among the federal laws.Mr.
• Immigrants’ Effects on Texas Real Estate However, despite the restriction, immigrants are likely to come to Texas and other states in America. Highly professional newcomers contribute to the development of the economy and stimulate the real estate market to expand.
• Real Estate & Stock Investment and Risk Management As more and more people access mortgage and own houses, the investment in real estate has had a fair share of challenges making it not as safe as it is popularly believed.
• Real Estate Investment and Financial Stock Consequently, it is critical to discuss the role of Real Estate Investment Trusts in the economic stability and their separation from the financial market at the end of this week with the help of the […]
• American Real Estate Bubble and Its Causes Every month, the homeowner that took out the loan from the bank needs to pay back a portion of the interest on the loan as well as the added interest.
• Real Estate Industry in the United Arab Emirates One of the most significant aspects that should be highlighted is that the regulatory environment has improved, and it has helped to draw the attention of foreign investors.
• Real Estate Text Marketing in China The general objective of this paper was to investigate consumer behavior towards the impact of text marketing to the real estate market in China.
• Text Marketing Impact to Real Estate Market in China Another factor that has contributed to the growth of the real estate in China is the growth of the country’s economy.
• House Prices in the Real Estate Market Increase income leads to high demand for houses; hence, leading to increase in house prices. For instance, house prices plummeted considerably between 1990 and 1992 in the UK because high interest rates made mortgages expensive.
• UAE Construction and Real Estate Sector This paper is aimed at examining the role of the construction and real estate sector in developing the economy and infrastructure of the United Arab Emirates.
• The Real Estate and Construction Industry in Saudi Arabia The construction of real estate in Saudi has grown at a very high rate in recent years mainly due to the increasing number of tourists visiting the country and good returns from the oil sector.
• E-business in the Real Estate In an effort to improve service delivery to its customers, the Real Estate industry has fully relied on ICT to meet the needs of the customers.
• Real Estate Law “Options Contract” Call option refers to a situation where the purchaser is granted a right to purchase land from the optionor, while put option is where the property owner has the right, but not a duty to […]
• Real Estate: Product Purchases and the Economy In the context of the substantial price growth, inflation increases the social differentiation of the population and creates a gap between the groups of income recipients.
• Australian Consumer Law on Real Estate Considering the piece of land that is on sale, the assessor will be lying about the characteristics, nature, and the suitability of the piece of land.
• Chinese Real Estate Bubble’ Reasons and Effects The Chinese blame the government and the cultural traditions for instilling the mindset during the real estate bubble in the country.
• Rent Control Effect on the Real Estate Industry The concept of rent regulation was developed in response to an argument by economic experts that the supply function in the housing market was inflexible.
• Real Estate Sector in Dubai The major private developers in Dubai include the Dubai Properties Group, DAMAC Properties, Emaar Properties, and Nakheel Properties. Despite the global economy experiencing a slump the real estate market in Dubai is still attractive to […]
• Epistemological Nature of the Knowledge and Skills Needed for Real Estate Management Real estate managers apply the concept of ideology to deal directly with tenants who belong to a certain social class and before entering into managerial contracts, real estate managers are required to understand the social […]
• New Ways of Marketing Real Estate The changing face of marketing, as a concept both in the real estate industry and beyond, can be attributed to the dynamic nature of the social and economic conditions of people as well as their […]
• Real estate bubble in China Through the government’s intrusion to direct the prices of residential houses, the housing sector has shown signs of decelerating trend in the prices of properties.
• Real Estate and Construction Sector in the UAE and the Effects of the Crises on the UAE and the Gulf Real estate and construction sector in UAE The study covers the actual effects of the crisis to the construction and real estate sector in the region which is among the key sectors in the economy […]
• The Impact of Bad Planning on Customer Perception in the Dubai Real Estate Industry Research aim The aim of this research is to examine how bad planning affects the outcome of the real estate projects in Dubai, in terms of customer perception on level of satisfaction and property resale […]
• Comparative studies of real estate industry: Hong Kong and Singapore Given the size of the population, the GDP, and the size of the land, one is justified to argue that land and buildings are the most significant sources of the state’s wealth and economy.
• Real Estate Business Analysis This means that the Crown Company is not new to the transactions and the way of running a business in the real estate sector, but they have to evaluate their options first.
• Planning, Execution and Control Capabilities in a Real-World Project – The Real Estate Projects in Dubai As one of the seven emirates of the United Arab Emirates, Dubai has cut a niche to be one of the most desirable destinations in the real estate.
• Escalation of real estate prices Increase in price of the existing homes also leads to the rise in the real estate prices. Increase in value of properties in certain areas is another factor that has significantly contributed to the increase […]
• Real Estate Investment Trusts: KIMCO The backbone of KIMCO operations is in the US where the company operates the largest database of shopping stores in 44 states.
• Red Book: Real Estate Valuation In the UK this control is limited to the provisions of the Estate Agents Act of 1979 and the Property Misdescriptions Act of 1991.
• Investing in Real Estate in Germany: Financial and Labour Forces to Consider The financial forces are critically important since they directly influence the viability, profitability and performance of the investment. Germany has also made it easier for international investors to conduct business in the country by incorporating […]
• Chinese Real Estate Market In this particular case, it can clearly be seen that there is an overarching system in the form of the state capitalist based economic model of China that has influenced its government to such an […]
• The Impact of the Real Estate in Dubai Economy The essence of this paper, guided by this brief history of Dubai, will be to investigate and evaluate the real estate in Dubai and the way it has contributed to the economy of the emirate […]
• Real Estate and Social Media The purpose of this essay is to discuss the history of real estate and social media, the position of social media over the last years, importance of technology to improve business, the best ways to […]
• How the American Dream and Subprime Loans Contributed to the Real Estate Crisis?
• How Accurate Are Commercial Real Estate Appraisals?
• Are Green Factors Able to Drive the Real Estate Value Up?
• Are the Global Real Estate Markets Contagious?
• Which Factors Attract FDI in Real Estate?
• Where Real Estate Investing and Speculation Collide?
• Did 1933 New Deal Legislation Contribute to Farm Real Estate?
• What Does the Stock Market Tell Us About Real Estate Returns?
• How Has Crowdfunding Changed Real Estate Investing?
• Does More Excellent Energy Performance Have an Impact on Real Estate Revenues?
• Can Real Estate Brokers Affect Home Prices Under Extreme Market Conditions?
• Does Corporate Real Estate Value Matter for Stock Returns?
• How Can Computer Software Help the Real Estate Appraiser?
• Can Investors Hold More Real Estate?
• Can Real Estate Investors Avoid Specific Risk?
• How SEO and Blogs Can Help Boost Real Estate Sales?
• What Are Factors That Influence Code of Ethics in Real Estate?
• Does Real Estate Ownership Matter in Corporate Governance?
• Does All Firms’ Productive Investment Benefit From Real Estate Price Increases?
• What Factors Determine International Real Estate Security Returns?
• How Are Student Loans Hurting the Real Estate Market?
• What Are the Roles and Responsibilities of a Professional Real Estate Manager?
• How the Commercial Real Estate Boom Undid the Banks?
• How Does Appraisal Smoothing Bias Real Estate Returns Measurement?
• How Directory Listing Boosts Real Estate Sales?
• Are Green Labels More Valuable in Emerging Real Estate Markets?
• Are Real Estate and Securities Markets Integrated?
• Does Real Estate Transparency Matter for Foreign Real Estate Investments?
• Are Real Estate Banks More Affected by Real Estate Market Dynamics?
• How Amazon and Same-Day Delivery Will Effect Retail Commercial Real Estate?
• Landfill Essay Titles
• Homelessness Questions
• Earthquake Essay Topics
• Airbnb Paper Topics
• Demographics Topics
• Gentrification Paper Topics
• Urban Planning Research Ideas
• Government Regulation Titles
• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2024, March 2). 131 Real Estate Essay Topic Ideas & Examples. https://ivypanda.com/essays/topic/real-estate-essay-topics/

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Real Estate Dissertation Topics

Published by Ellie Cross at December 29th, 2022 , Revised On May 21, 2024

A real estate transaction involves land, buildings, properties, air rights, and subsurface rights. Academics have recognised real estate as one of the critical economic drivers. Those studying business-related courses at university will encounter this topic quite often.

It can be challenging to develop an intriguing topic for your real estate dissertation or thesis paper that will impress your professor. The difficulty of researching in this constantly evolving field is fundamental to what areas you should conduct research. 

Choose a topic that fits your preferences and get started with your dissertation right away. 

Below is a list of the best custom real estate dissertation topics and ideas compiled by our top academic writers in the UK. Students can find these dissertation topics online to avoid experiencing delays in their dissertation writing .

List of Real Estate Dissertation Topic Ideas

• Analyse the various economic characteristics of a real estate asset
• Why has the volume of new residential construction projects in 2022 decreased?
• Why is house flipping getting more popular in the real estate sector?
• The contribution of buyers’ agents to efficient property management
• The meaning of the Black Lives Matter demonstrations about real estate
• A comprehensive analysis of the benefits and drawbacks of buying a property in an auction
• A critical study for comprehending the influence that stock markets and institutional investors have on the growth of the real estate industry
• Evaluating how political dominance affects the UK real estate market
• The importance of management plans for efficient estate administration in the UK
• A detailed comparison of residential and commercial real estate
• How has Real Estate Management been affected by COVID-19. A case study that demonstrates how procedures have changed
• In connection to commercial estate management, highlighting the growth and fall of the real estate sector
• Examining the viability of Real Estate Investment Trusts and how they operate
• A thorough examination of how the environment affects real estate management in the UK
• A review of the importance and effects of talent management in the UK real estate industry
• Investigating the effects of real estate education programs in the UK
• An assessment of real estate management in politically unstable economies
• Investigating the relationship between British real estate management practices and banking profits.
• Examine the real estate management tactics used in the UK’s business world.
• Examine the principles that have helped public real estate management and development in the UK and the USA
• Examining the risks to real estate agencies in the UK related to outsourcing various corporate real estate management tasks
• How is the erratic banking system negatively impacting the real estate market?
• How business investors may help you purchase the home of your dreams
• Issues with loans in the real estate sector
• How can one grow a reliable clientele in the real estate industry?
• The effects of mortgage loans on a family’s ability to grow and maintain stability
• Describe how insurance providers fit into the real estate sector
• Various opportunities and risks for prospective real estate financiers in Britain
• Methods for addressing income risks while determining the value of a property
• Investigating the connections between government institutions and real estate financiers
• Managing border disputes between different property owners
• Recession’s impact on the real estate sector
• Metropolitan real estate’s cyclical nature: A historical investigation of shifting real estate values
• Native Peoples and Real Estate Evaluation: Assessment, Market Research, and Public Policy
• Recent developments in the real estate and retail sectors
• Global Real Estate Education: Past, Present, and Future
• Learning about demographic patterns and how they affect the real estate market
• A thorough analysis of the factors affecting property taxes and expenditures
• Adhering to the complex regulations governing the real estate market
• Real estate public expansion investment and urban improvement politics
• Protocols and construction processes for holiday houses
• A detailed examination of Business Property Estate Lending
• Laws and customs govern rent payment procedures
• A discussion of the benefits and drawbacks of buying property at auction
• An inquiry into the relationship between the inheritance tax and its effects on the real estate market
• An analysis of the housing market’s collapse
• Examining real estate management trends and methods in the UK via the lens of technological improvements
• Risks associated with the use of potentially harmful building materials
• Building construction considerations for safety and health
• Credit value in the erratic housing market
• Effects of borrowing money to buy a new house
• The impact of asset financing on modern society
• Property transaction taxes and the housing market are related
• Planning for the construction of underground housing in the UK
• An investigation into how real estate buyers behave
• Examining the UK’s new-age buyers’ homeownership tendencies
• The UK’s prevailing inherited real estate legislation
• Dangers related to the utilisation of potentially hazardous construction supplies
• Safety and health issues in building construction
• Effects of borrowing money to purchase a new home on credit worth in the unpredictable housing market
• Asset financing’s effects on contemporary society
• The housing market and property transaction taxes are connected
• Planning is being done in the UK to build subterranean dwellings
• Examine real estate purchasers’ actions by looking at the homeownership habits of the UK’s new-age buyers
• The current real estate laws that the UK has handed down
• PropTech in Transforming the British Real Estate Market
• the Impact of Build-to-Rent on Housing Affordability in the UK
• The potential of Co-Living Spaces for Young Professionals in Major British Cities
• The Impact of Brexit on Foreign Investment in British Commercial Real Estate
• Regenerating Brownfield Sites for Sustainable Urban Development in British Cities
• The Role of Real Estate Agents in Digital Disruption and Online Platforms
• The Role of Real Estate Investment Trusts (REITs) in Portfolio Diversification Strategies
• The Role of Community Land Trusts in Promoting Affordable Housing and Community Development
• The Use of Virtual Reality (VR) in Real Estate Marketing and Sales Strategies
• The Legal and Regulatory Challenges of Regulating the Sharing Economy in the Housing Market
• The Ethical Considerations of Using Facial Recognition Technology in Property Management
• The Future of Work and the Impact on Design and Demand for Office Space

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Introduction to Special Issue: Topics Related to Real Estate Market Efficiency

• Published: 21 December 2022
• Volume 66 , pages 197–202, ( 2023 )

Cite this article

• Daniel Broxterman   ORCID: orcid.org/0000-0002-1542-4813 1 ,
• Dean Gatzlaff 1 ,
• Mariya Letdin 1 ,
• G. Stacy Sirmans 1 &
• Tingyu Zhou 1  

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The efficiency of the real estate market is a major concern for homeowners, investors, lenders, policymakers, and researchers. Modern academic literature has mostly moved beyond an early emphasis on formal tests of informational efficiency. The Grossman and Stiglitz (The American Economic Review 70:393–408, 1980) paradox holds that perfect informational efficiency is impossible and the joint hypothesis problem implies that market efficiency is not even testable. Instead, researchers now commonly examine the speed, accuracy, and persistence of price movements in response to new information, as the allocative efficiency of a market ultimately depends on its degree of informational (and operational) efficiency. This special issue is devoted to exploring these issues.

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Focused on the theme of “Topics Related to Real Estate Market Efficiency,” the Real Estate Center at Florida State University, the Kelley A. Bergstrom Center at the University of Florida, and the Dr. P. Phillips Institute for Research and Education in Real Estate at the University of Central Florida jointly planned a research forum to discuss recent work. A call for papers solicited research on the topic covering all major sectors of the real estate market: residential and commercial, equity and debt, private and public, space and capital. In response to the call, manuscripts were received, reviewed, and selected for presentation at a symposium to be held at Florida State University from April 2 to 4, 2020. Unfortunately, the symposium was cancelled due to the COVID-19 pandemic. However, the selected papers were invited to be submitted for publication in this journal through a formal double-blind peer review process. Eight symposium papers were ultimately accepted for publication in this special issue. The papers can be fitted into four topical areas: 1) Risk Perceptions, 2) Novel (Empirical) Estimates, 3) Brokerage Markets, and 4) Related Research on REITs. A ninth paper, a survey of the literature on information frictions in real estate markets, was invited for submission and review to provide a helpful resource for researchers that compares recent results with influential earlier findings.

In the first paper, “Information Frictions in Real Estate Markets: Recent Evidence and Issues,” Daniel Broxterman and Tingyu Zhou review recent work on imperfect and asymmetric information within the private, public and brokerage markets. Empirical researchers will benefit from their coverage of fourteen proxy variables that have been used to identify asymmetric information in studies of the private markets. On the public side, their review discusses whether REITs are more transparent and suffer from fewer agency costs than traditional publicly traded firms. For brokerage, they find that recent research has been obtaining more muted results on conflicts of interest than those that appeared in a set of papers that received significant attention in the popular and academic presses. As they say, “it has been freakonomics versus econometrics, and econometrics is winning.” Lastly, we believe readers will appreciate their suggestions for future research on these and other issues.

Risk Perceptions

The two papers in this grouping analyze house prices and changes in the perceived risks of environmental accidents and natural disasters. In the first, “Past Experiences and Investment Decisions: Evidence from Real Estate Markets,” Brent Ambrose and Lily Shen examine the price dynamics of homes located near fracking wells in Pennsylvania. Because the shale boom began relatively recently, researchers can assume that information regarding a homeowner’s risk of exposure to negative fracking externalities is imperfect. Motivated by a Bayesian learning framework, they test if familiarity with risks from conventional gas drilling impacts the perception of risks associated with proximity to fracking activities: i.e., does past experience alter the value of new information. They report that houses in fracking areas with existing conventional wells sell for less than similar homes in fracking areas that lack prior drilling activity. This, the authors indicate, “suggests that despite the public fear of fracking-related environmental risks, house price dynamics reflect realized fracking risks instead of perceived threats.” They also show that while fracking accidents lower house prices, the effect disappears within two to three months if no additional accidents occur, suggesting that buyers rely heavily on recent information while discounting historical data.

In the second paper, “The Impact of Distant Hurricane on Local Housing Markets,” Lu Fang, Lingxiao Li, and Abdullah Yavas consider whether property prices in Florida are affected by Hurricane Sandy, which made landfall in New Jersey in 2012. Hurricane Sandy embodied public concerns that the effects of global climate change were exposing new areas to flood risk and increasing property risk in existing flood-prone areas. The authors examine if the arrival of this information affects market perceptions of the latter hazard by raising awareness and concerns about possible similar events in a distant, unimpacted area considered vulnerable to hurricanes. Using data from 2004 to 2014 from Miami-Dade County, they report that this major hurricane event at a distance raises home buyers’ perceptions of flood risk, relative to base expectations, but only for a short period (i.e., one-quarter). That they find no persistent effect of Sandy for the US metro area already most at risk of experiencing a hurricane impact still leaves open the possibility that property owners in other areas, especially along the northeastern seaboard, may have updated their risk perceptions based on Sandy.

Novel (Empirical) Estimates

A common method used to estimate land value in a built-up area with few vacant land sales is the land residual model, which is based on the cost approach to appraisal. In this method, the depreciated replacement cost of the improvements is subtracted from the appraised value or transaction price of a property to extract the value of the land. A critical assumption underlying the land residual model is that the values of land and structure are additively separable and evolve independent of each other. This assumption is questioned by John Clapp, Jeffrey Cohen, and Thies Lindenthal in their paper, “Are Estimates of Rapid Growth in Urban Land Values an Artifact of the Land Residual Model?” They develop an option value model which they argue improves market information (and efficiency) by producing better estimates of real estate risk, where risk is an increasing function of the land value ratio, as documented in the land leverage literature.

Land valuation, naturally, has important implications for assessment and property taxation. Furthermore, imperfect information about land values can move the market away from Pareto-efficient outcomes in the sense that transactions are typically efficient only in the presence of accurate (i.e., perfect) information. More accurate estimates of land values, such as those proposed by Clapp, Cohen, and Lindenthal, can lead to greater confidence that real estate markets allocate structure and land inputs according to their market prices and marginal productivities.

In “After the Boom: Transitory and Legacy Effects of Foreclosures,” Geoffrey Turnbull and Arno van der Vlist examine the short- and long-term effects of foreclosure information on house prices in Orange County, Florida. They use almost 20 years of data to examine the effects of nearby foreclosures on home sales during the 2016 to 2019 period. As expected, they find that recent and past foreclosures are associated with lower house prices and that the effects are mostly transitory. At, 0.4% to 0.8%, legacy effects (discounts) on surrounding prices are modest, about one-tenth the size of the marginal effect of a nearby recent foreclosure. This appears to be the first published paper to test for long-run effects of nearby foreclosures on house prices.

Brokerage Markets

The next two papers study listing strategies and brokerage networks, respectively. In “Why Disclose Less Information? Toward Resolving a Disclosure Puzzle in the Housing Market,” Xun Bian, Justin Contat, Bennie Waller, and Scott Wentland examine listings from the Richmond, VA metro area and find that only 30 to 40% contain the maximum number of photos allowed by the local MLS. Thus, the question as to why a broker would disclose less information when marketing a property is raised. To address this question, the authors turn to the theory of ordered consumer search. They argue that although reducing information in a listing tends to reduce the arrival rate by increasing uncertainty regarding the property’s condition, under-disclosing a property’s taste-specific features may increase the arrival rate. Thus, for higher priced homes which feature more customization, incomplete disclosure may be an optimal seller strategy because quality is more readily presumed. Empirical testing confirms that less information disclosure is associated with higher sale prices and shorter time on the market for higher-end home, ceteris paribus. From an efficiency standpoint, results in this paper provide a new example of sellers behaving strategically in a market where search is costly and information asymmetric.

David Scofield and Jia Xie, in “Network Formation and Effects: Observations from US Commercial Real Estate Markets,” examine whether commercial real estate brokers make transactional connections randomly or through their professional networks, in other words, do brokerage networks matter in the commercial property market? To answer this question, the authors fit a dynamic network formation model to an extensive dataset drawn from the investment sales side of the commercial brokerage market. They off three main findings. First, while there is substantial variation across geographies and property types, most sales (67%) are facilitated by networked brokerage relationships. Second reliance on network relationships is counter-cyclical, i.e., higher (lower) during periods of contraction (expansion). Lastly, firms with smaller networks are more likely to trade with firms with larger networks. These findings, interesting on their own, raise important questions for future research regarding the completeness of the information shared across public/private networks, search mechanisms, and the potential for principal-agent conflicts.

Related Research on REITs

The final two papers in this special issue present related research in the publicly traded sector. In “The Cost of Financial Flexibility: Information Opacity, Agency Conflicts and REIT At-the-Market (ATM) Equity Offerings,” George Cashman, David Harrison, Shelly Howton, and Benjamin Scheick study the effect of establishing a new equity raise channel, at-the-market-offering (ATM), on the cost of capital for REITs. ATMs provide financial managers with flexibility and control, enabling a smoothing of the typically “lumpy” issuance process. This enables managers to better match the timing of their capital raising activities with investment opportunities. Footnote 1 However, an increase in managerial control of the capital raising process could increase potential agency conflicts that may offset the flexibility and lower capital raising costs. Using a sample of ATM announcements from 2006 to 2015, the authors find REITs that raise capital through ATMs, as opposed to SEOs, face a higher cost of capital. The implied cost of capital is 130 basis points greater (per annum) during quarters in which the firm has an open ATM program. The findings in the paper suggest that the market is efficient in pricing a risk premium for ATMs, as it signals greater firm opacity and discretionary manager activity. The authors show that more informationally opaque REITs that pursue ATMs face a higher increase in capital costs than their more transparent peers, supporting the notion of an informationally efficient market.

Lastly, in “Narrative Investment-Risk Disclosure and REIT Investment,” Dongshin Kim, Dongkuk Lim, and Jonathan Wiley investigate the line between investment-risk disclosure (extracted from 10-K filings) and investment (tracked in the S&P Global Market Intelligence property database) using a sample of REIT firms. REITs are examined because they offer a sector with quantifiable asset risk, making it is easier for researchers to identify the effects of disclosure changes separate from changes in firm fundamentals. In particular, they evaluate the impact of “excess” narrative information on return volatility, trading volume, and forecast revisions surrounding annual filings. In contrast to findings in the literature for general firms, the authors do not find any statistically significant effects of investment-risk disclosure on volatilities or analyst forecast revisions. However, they report a strong positive liquidity impact—conditioned on increased investment, trading volume increases for firms with high investment-risk disclosure.

Accurate information disclosure should enhance market efficiency and the results in Kim, Lim, and Wiley on liquidity are consistent with this notion. Their finding that volatility and analyst forecast revisions are not significantly affected by this disclosure is an interesting result. It supports the notion that REITs (highly regulated, invest in a single-class asset, etc.) are relatively more transparent compared to traditional public firms, and raises questions regarding the informational content provided to analysts. This paper contributes to the debate on whether REITs have lower information asymmetries relative to non-REIT stocks.

So, what do these papers tell us about the responsiveness of the real estate market to new information? Here are a few broadly written conclusions from the papers in this issue. First, house prices, though privately negotiated, respond quickly to new information regarding indirect catastrophic events (e.g., major hurricane with an unusual track), environmental exposures (e.g., fracking boom), and disruptive market events (e.g., foreclosure wave). However, it appears that these effects are not sustained, but dimmish over time (i.e., the market’s memory may be limited). Findings suggest that it is likely that market participants may overweight recent information and underweight historical information. Second, in a market where search is costly and information asymmetric, information can be employed strategically. For example, high-end customized residential properties may benefit from limited information disclosure in their listings and the use of trading networks may provide large commercial real estate firms with bargaining advantages. Finally, REIT research indicates that corporate finance decisions are priced by an informationally efficiency market, generally consistent with the broader stock market, but that the effects of information asymmetries in the REIT market are muted relative to non-REIT stocks.

Together, the nine papers in this special issue provide a broad examination of topics related to real estate market efficiency. In addition to raising new questions, we are confident that you will enjoy the papers and find them useful in better understanding how information is synthesized in the real estate markets.

The alternative to ATMS are seasoned equity offerings (SEOs) which require outside underwriting and have higher issuance costs (5% for SEOs versus 2.2% for ATMs).

Grossman, S. J., & Stiglitz, J. E. (1980). On the impossibility of informationally efficient markets. The American Economic Review, 70 (3), 393–408.

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Broxterman, D., Gatzlaff, D., Letdin, M. et al. Introduction to Special Issue: Topics Related to Real Estate Market Efficiency. J Real Estate Finan Econ 66 , 197–202 (2023). https://doi.org/10.1007/s11146-022-09928-7

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Accepted : 27 October 2022

Published : 21 December 2022

Issue Date : February 2023

DOI : https://doi.org/10.1007/s11146-022-09928-7

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111 Real Estate Essay Topics

🏆 best essay topics on real estate, 🌶️ hot real estate essay topics, 🎓 most interesting real estate research titles, 💡 simple real estate essay ideas, ❓ real estate research questions.

• D. M. Pan National Real Estate Company’s Housing Price Prediction Model
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• Use of Microsoft Office Suite Application by a Real Estate Appraisal Specialist
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• Demographic Changes and the Future of Real Estate An increase in population in any region will always increase the demand for accommodation houses in the real estate industry.
• Real Estate Business in Australia The real estate market in Australia experienced an upswing during the pandemic; indeed, people started to buy more residential properties during the last two years.
• Investment Viability in Real Estate The real estate is divided into residential real estate and commercial real estate. Residential real estate is concerned with all types of housing; apartments and family homes.
• Islamic Real Estate Investment Trust REITs form part of Investment Trusts in Real Estate. These are trusts that give investors an investment guide in all landed properties.
• Business Ethics in Real Estate Business ethics still remains one of the most important areas in business practice influenced by internal and external factor, cultural and social changes.
• Cost per Square Foot in the Pacific Region: Hypothesis Testing This paper uses statistical analysis to compare the average sample cost per square foot to the reported cost per square foot.
• Business Model of McKinnie Real Estate This paper aims to explore the business model of McKinnie Real Estate using the Business Model Canvas framework, identifying external and internal factors of impact.
• Selling Price and Area Analysis for D.M. Pan National Real Estate Company The report aimed to study the correlations between the area of the real estate objects measured in square feet and the selling price to benchmark.
• Real Estate Role in Sustainable Development The objective of this paper is to investigate the role of real estate in sustainable development in developing countries.
• Concepts Used for Real Estate Closing This study examines four distinct phrases that may be utilized throughout the closing process of a real estate transaction.
• Islamic Reits: Real Estate Investment Trust This paper reviews some of the studies done on IREITs with the aim of determining their effectiveness during economic downturns.
• Investing in Real Estate in Germany: Factors to Consider Real estate investment in Germany is a sure bet as only 45% of the population occupies their own homes. In Berlin, only 13% of the residents have their own homes
• Inflation in the Real Estate Industry This paper will cover the real estate industry in the US, as it might be affected by the increased inflation rates, as the demand for housing is not increasing as quickly.
• Real Estate Appraisal: Single- and Multi-Family Houses An appraisal is the opinion of an expert to estimate the value of a residence. What the appraiser will work on will be giving a report in regards to the size, state of the house, etc.
• Real Estate Strategic Improvements Strategic planning is a systematic process that aids in creating goals for an organization’s future and determining the best way to accomplish them.
• Median Housing Price Prediction Model for Real Estate Company In this paper, a regression analysis was conducted to determine the nature of the relationship between listing price and commercial space in East South Central.
• Real Estate: Impact of New Building Trends and Technologies Architectural rendering, construction simulation, 3D models, building information modeling, and sustainable building positively influence the future of real estate.
• Technologies and Trends in the Real Estate Industry in the USA This paper discusses how technology has played a significant role in advancing the building and construction industry in the United States, making it a global power.
• Oil Prices as a Trend in Real Estate Business The scientific work aims to consider the impact of such a real estate trend as oil prices and how their growth or fall affects it.
• Real Estate Investment and Hospitality Industry Performance The COVID-19 pandemic has also affected real estate investments differently. Some businesses benefited from the rise of coronavirus, while others recorded so many losses.
• Aspects of Fundamentals of Real Estate The city’s proper zoning and housing can increase the quality of life and provide free of pollution living conditions for citizens.
• U.S. Real Estate Industry Analysis The paper focuses on real estate as an industry and analyzes the primary points, such as major companies and the perspectives of the business groups.
• Comparing Islamic REITs: Insights from Global Financial Crises The performance of Islamic REITs during economic downturns has not been determined. It has not been determined whether they perform better than the conventional REITs.
• Smart Home in Aging Society: Real Estate Industry The increase in the global aging population has been recognized in connection with the trends in morbidity and mortality of older adults has continuously dropped.
• Real Estate Judgement Summary The case presented by the United States Attorney General seeks a determination of whether the mineral reservation law.
• The Relative Effect of Property Type and Country Factors in Reduction of Risk of Internationally Diversified Real Estate Portfolios The aim of this paper is to identify and study the impact of diversifying portfolios of real estate securities mainly based on two categories.
• Land Supply and Real Estate Development in Hong Kong Hong Kong’s real estate industry is characterized by a high rate of appreciation, a clique of a small group in the industry, and a relatively huge public housing sector.
• Industry Research Completion: Real Estate Industry Industry passes through a sequence of developments and downfalls either due to external factors or any internal grounds.Economic establishment helps to foster the growth of industries
• Scottish Real Estate Market Analysis The economics, dynamics and interactions between use, investment and development sectors are discussed for analyzing the factors that influence trends of the commercial real estate market.
• Real Estate and Affordable Housing Many people have suffered the consequences of the crisis financially. This crisis calls for a measure that provides shelter at a reasonable rent or price.
• Real Estate Company’s Information Management The report addresses the concerns and constraints that real estate firms have to face during the implementation of their key objectives and management of customers’ needs.
• Factors and Beliefs on Real Estate Markets The government is looking into revamping growth by addressing unemployment and taxation issues. These two vital factors largely affect real estate markets.
• Restriction on Ownership and Its Impact on Real Estate Market Real estate is a sector that has attracted several investments in recent years. The sector growth has attracted several rules and regulations to protect both private and public interests of its acquisition.
• Real Estate Market Role in Macroeconomics Real estate markets are affected by several factors, and employment changes are a core factor. Reduction of exports and real estate hiccups are to blame for the soaring unemployment figures being realized.
• Rengo Real Estate Project Marketing Strategy Marketing has a broad range of activities. The promotional approach would enhance the use of promotion mix to try to sell the Rengo Real Estate Project.
• European and American Real Estate Institutions Various countries have different policies and structures that govern the operations of a real estate institution. This paper handles five major real estate institutes.
• State Bank’s and Real Estate Bank’s Collapse Today, the collapse of state banks is the problematic situation which is often associated with significant economic and political problems in the country.
• Indonesia’s Potential Real Estate Bubble The Indonesian housing market is heading towards a burst. This reality has been necessitated by economic factors that are integral to its propagation.
• Investing in Real Estate in Germany: Political and Legal Factors to Consider When engaging in international business, investors must comprehensively consider the political and legal factors existing in their preferred investment countries.
• Cognitive Moral Development and Real Estate Practitioners
• Effective Facebook Marketing for Real Estate Business
• Cross Border Real Estate Investment in India
• European Non-Listed Real Estate Fund Risk Factors
• Controlling for the Impact of Variable Liquidity in Commercial Real Estate Price Indices
• China’s House Price: Affected by Economic Fundamentals or Real Estate Policy
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• Commercial Real Estate and Corporate Finance
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• Buy and Holding Real Estate
• Economic Recovery, Small Business, and the Challenge of Commercial Real Estate
• Commercial Real Estate and Native American Leasing
• Budgetary Risks From Real Estate and Stock Markets
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• Contested Market Making in India’s Private Real Estate Development Sector
• Economic Risk Factors and Commercial Real Estate Returns
• Globalisation, Institutional Structures and Real Estate Markets in Central European Cities
• High Inflation and Returns on Residential Real Estate in Turkey
• California Real Estate State Exam Latest
• Broward County Real Estate Best in Florida
• Asymmetric Information and the Predictability of Real Estate Returns
• Financial Crisis and the Real Estate Market in Greece: The Impact on Bank Stock Prices
• Corporate Real Estate’s Impact on the Takeover Market
• Asymmetric Risk Measures and Real Estate Returns
• Contrarian Real Estate Investment in Some Asia Pacific Cities
• Commercial Real Estate and Management Information Systems
• Corporate Real Estate and Stock Market Performance
• Creative Real Estate Financing Methods
• Bargaining over Residential Real Estate: Evidence from England
• Bridging the Gap between Capital and Real Estate Markets
• China Real Estate Market
• Clustering Methods for Real Estate Portfolios
• Consumer-Oriented Real Estate Technologies
• Expected Returns and Expected Growth in Rents of Commercial Real Estate
• Financial Development, Real Estate Development and Economic Development
• Individual Agents, Firms, and the Real Estate Brokerage Process
• Financing Real Estate and Urban Regeneration in Iran
• Key Factors Which Impact on Real Estate Market
• Are Nurses More Altruistic Than Real Estate Brokers?
• Can Linear Predictability Models Time Bull and Bear Real Estate Markets?
• Are Real Estate Markets Integrated With the World Market?
• Can Institutional Investors Bias Real Estate Portfolio Appraisals?
• Did Investors Regard Real Estate as ‘Safe’ During the ‘Japanese Bubble’ in the 1980s?
• Does Real Estate Ownership Matter in Corporate Governance?
• Does the Diversification Potential of Securitized Real Estate Vary Over Time?
• What Are Interactions Between Private and Public Real Estate Markets?
• How Computer Software Can Help the Real Estate Appraiser?
• How Efficient Are Real Estate and Construction Companies in Iran’s Close Economy?
• How Globally Contagious Was the Recent Us Real Estate Market Crisis?
• How Inheritance Affects the Real Estate Market in an Aging Economy?
• How Real Estate Developers Can Improve Community and Political Stability?
• What Attracts Foreign Direct Investment in China’s Real Estate Development?
• What Moves Appraisal-based Real Estate Returns at the Metropolitan Level?
• What Role Does the Real Estate Construction Sector Play in China’s Regional Economy?
• Why Real Estate Industry Does Not Build Affordable Housing in India?
• Why the Real Estate Market Can Work for You and Against You?
• What Factors Are Affecting the Location of Real Estate?
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• Is There a Real Estate Factor Premium?
• What Is a Regression Method for Real Estate Price Index Construction?

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155 Brilliant Real Estate Dissertation Topics You Should Use Today

Real estate is the land, property, buildings, underground rights below, and air rights above the ground. Being a critical driver of the economy, real estate has earned a spot in academia. College and university students pursuing business-related courses will encounter this field in the cause of their study.

However, it is not that easy to impress your professor, especially with brilliant real estate topics. The challenge of having to research in this ever-dynamic industry is fundamental to most students. With that in mind, we have compiled over 150 real estate research topics from our guru British writers for your inspiration.

Top-Notch Real Estate Dissertation Topics in UK

• The role of real estate in reviving the U.S. economy during the recession period
• How the construction of new buildings is a crucial pillar of gross domestic product
• The contribution of real estate to a nation’s economic output
• Discuss the growing condominiums, townhouses, and single-family homes in the U.S.
• What is the function of the National Association of Home Builders?
• How the sale of homes is becoming a leading economic indicator
• Our real estate agents watering down the effectiveness of the industry?
• How sellers’ agents help find buyers using digital technologies
• The impact of buyers’ agents to effective real estate management
• What are the limitations of the legalities involved in the real estate industry?
• Why professionalism is vital in the practice of real estate
• Are homebuilders becoming overenthusiastic about future sales?
• The role of individual homeowners in advancing real estate
• Discuss a case study of the current real estate market statistics in the U.S.
• Is it advisable to get a mortgage when thinking of investing in real estate?

Real Estate Research Paper Topics For Higher Grades

• Factors that contribute to the rise in the value of a particular land
• How are interest rates and taxes demoralizing many from investing in the industry?
• Is real estate a profitable venture?
• Why it is advisable to buy a home over living in rentals
• Analyze some of the technicalities involved in purchasing the stocks of homebuilders
• The impact of the varying stock prices on the housing market
• Evaluate the various developments in residential real estate ownership
• What future lies in store for the real estate market?
• Discuss the rise in the number of privately-owned housing units in the U.K.
• The implication of a shortage in concrete, lumber, and construction workers

Hot Real Estate Topics

• Discuss the mutual relationship existing between building costs and sales prices
• Discuss the critical role of local housing regulators in real estate
• Compare and contrast the sale of multifamily units versus single-family units
• Key economic indicators for real estate investments
• The part of consumer confidence index to real estate agents and companies
• Why homebuyers are shrugging off the rising mortgage rates
• Discuss the drop in home sales amid low supply during COVID-19
• Evaluate the effectiveness of buying an existing home vis-à-vis building your own
• The impact of bad weather and high costs on new home sales
• Factors to consider when choosing the best residential construction company

Current Real Estate Topics

• The future of real estate with the emerging building technologies and trends
• Why land is a critical component of real-estate
• Characteristics of personal property that differentiate it from real-estate
• Discuss the distinct economic characteristics of a real estate investment
• Why most urban centers are booming with commercial real estate
• The impact of coronavirus on the prices of homes and rentals
• Discuss the effects of global warming on the construction of homes
• Why has the number of new residential construction projects shrunk in 2022
• Why most people are shifting to the house-flipping mode of real estate investment
• The implication of the Black Lives Matter protests on real estate

Commercial Real Estate Blog Topics

• How employment rates are affecting real estate prices
• Why active management and expertise are necessary for any real estate project
• Is it advisable to invest in real estate through Real Estate Investment Trust (REIT)?
• The role of mortgage-backed securities in triggering a global financial crisis in 2007-08
• Why mortgage lending discrimination is still persistent in most countries
• Trading strategies that will make you survive in the real estate industry
• Evaluate the pooled private and public investments in the property markets
• Profit-generating activities that one can try on land in 2022
• A technical analysis of real estate investors using age as a variable
• Why investing in luxury real estate may back-fire on you

The Best Real Estate Thesis Topics

• Real estate as a pillar of the national economy in the United States
• Long-term economic challenges likely to affect the real estate market
• Analyze the evolution of the real estate industry over the past 50 years
• Discuss the latest home buying and selling models in 2022
• How to tame scammers encroaching in the real estate industry
• Discuss economic forecasting as a critical aspect of the cynical nature of the real estate
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• Discuss how real estate management transpired from the Indians to other early settlers
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• How the 2007 economic recession changed real estate management practices
• Discuss the impact of real estate investments on credit unions
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• Federal laws that guide the process of purchasing a bank-owned property
• Discuss the effectiveness of legal debt and deficiency actions
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• How property transfers by wills are becoming a source of conflict in societies

Custom Real Estate Topics To Write About

• How to protect value in real estate while managing the various investment risks
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• Discuss the Geography of real estate and finance
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• Discuss the critical pillars of real estate financing models
• Discuss the growing use of corporate loans in real estate financing
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• Published: 20 November 2023

Behavioural biases in real estate investment: a literature review and future research agenda

• Akshita Singh 1 ,
• Shailendra Kumar 1 ,
• Utkarsh Goel 1 &
• Amar Johri 2  

Humanities and Social Sciences Communications volume  10 , Article number:  846 ( 2023 ) Cite this article

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Psychological aspects of human nature cause behavioural biases and can lead to decisions that differ from what is expected based solely on rational analysis. The effects of behavioural biases on financial markets like stocks and mutual funds have been studied previously, but real estate has yet to receive much attention. The existing works in the real estate domain have focused on different biases, but no study has examined the works already done to provide concise documentation of these past works. Thus, this article is an earnest attempt to fill that gap. This paper reviews the articles which were sourced from Scopus and the Web of Science database, published between 1980 and 2022. The PRISMA model led to the inclusion of 86 articles for the review. Analysis revealed that anchoring bias, loss aversion, and herding bias have been studied extensively. On the other hand, biases like gambler’s fallacy, familiarity bias, framing bias, home bias, confirmation bias and mental accounting have been less explored. The paper identifies the substantial gaps in the existing studies, giving avenues for future exploration. The key ones are, firstly only a few biases have been studied extensively and many biases are less explored, particularly using primary data. This provides a vast available space for future work. Secondly, studies in developing countries are fewer, which needs to be addressed. Lastly, studies need to explore the interplay of different biases to create a more robust model that can explain the effect of these biases. The paper gives a conceptual understanding of different biases and what factors affect them. Also, it will help policymakers strategize their business and mitigate the negative effects of biases.

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Introduction.

The need to better understand the factors and processes that influence investment decisions has led to a greater investigation into the investment decision-making process (Kengatharan and Kengatharan, 2014 ; Chaudary, 2019 ). Numerous principles and theories assist traditional finance asserting that markets are efficient and systematic; these include “the Markowitz portfolio theory”, “the Miller and Modigliani arbitrage theory”, “the CAPM model of Sharpe, Linter & Black”, and “the option pricing theory of Black, Scholes and Merton” (Merton, 1985 ; Zain-ul-Abdin et al., 2019 ). The assumption that becomes the founding pillar for the efficient market hypothesis (EMH) is that investors are rational and the estimation of financial asset prices includes the incorporation of all the available information (Fama, 1970 ; Weixiang et al., 2022 ). The efficient utility theory (EUH) states that investors face the challenge of choosing among various alternatives amidst a world crowded with uncertainties during decision-making, and investors make rational judgements by weighing all available options according to their benefits and the risks they pose. Thus, they make balanced decisions (Kumar and Goyal, 2015 ; Jain et al., 2022 ).

The “Prospect theory,” which exhibits conflicting outcomes with EMH and EUH, was brought to the public’s notice by the investigations conducted by Kahneman and Tversky ( 1979 ). The theory questioned the idea of rationality and fundamentally altered how investment decision-making was studied. The economists Meir Statman, Richard Thaler, Hersh Shefrin, David Bell, Robert Shiller, and others continued this path-breaking research finding. Thus, how do investors behave? Furthermore, why do they behave in a particular manner? To answer these questions, a new concept of behavioural finance emerged in 1980. Behavioural finance discusses the irrationality in decision-making and the psychological elements driving it. The investor’s decision usually deviates from rationality and leans toward irrationality due to behavioural biases (Baker and Ricciardi, 2015 ; Kumar and Goyal, 2015 ). Behavioural bias is an inclination towards error (Shefrin and Statman, 1985 ). Amidst this ongoing debate between rational and irrational decision-making, Lo ( 2012 ) suggested that investor behaviour is not hard-lined towards either side of rationality but is a situational adaptive behaviour where investors behave more rationally during stable market conditions and tend to become irrational during turbulent or volatile market condition (Apau and Jeke, 2022 ; Muzindutsi et al., 2023 ).

Various behavioural biases influence investors when making investment decisions (Dervishaj, 2021 ; Mittal, 2022 ; Bihari et al., 2023 ; Sinha and Shunmugasundaram, 2023 ). The commonly discussed biases in different investment avenues, i.e., Stock market, mutual fund, and real estate investments, are overconfidence, disposition effect, anchoring bias, availability bias, loss aversion, regret aversion, herding, representativeness, mental accounting, etc. While the research has mainly focused on stock markets, studies on behavioural biases have substantially improved our understanding of investor actions in financial markets. In this area of research, real estate investing needs to receive more attention. Investment in real estate is the most significant financial transaction undertaken by the average household (Beracha and Wintoki, 2013 ; Seay et al., 2018 ; D’Lima and Schultz, 2021 ). Despite several studies demonstrating an integrated relationship between real estate and stock returns, real estate markets differ in liquidity, transparency, and regional heterogeneity (Bao et al., 2021 ; van Dijk et al., 2022 ). The key difference between investment avenues, like the stock market or mutual funds, and real estate is that while the former avenues are available over the counter in a well-defined systematic market, the latter is more of an unorganized market where people invest in purchases and sales on personal levels and not on any systematic trading platform. Real estate frequently displays behaviour difficult for typical asset market models to account for (Engelhardt, 2003 ; Beracha and Skiba, 2014 ). For instance, they show sharp price fluctuations (Li and Wan, 2021 ). Buyers frequently offer varying prices for properties that are almost identical, which may be due to information asymmetries in real estate markets (Zhou et al., 2015 ). This information asymmetry and difficulty in getting systematic data easily may have caused reduced interest by researchers in studying this field. The data from stock markets are quickly and transparently available due to a systematic market worldwide. This transparency is lacking in the real estate sector (Schulte et al., 2005 ; Newell, 2016 ). Also, the data is not readily available, which naturally deflects the researchers as data availability is a significant issue while performing research (Krause and Lipscomb, 2016 ). Such issues cause less interest by researchers in this area of study.

In real estate literature, few studies have focused on behavioural anomalies (Arbel et al., 2014 ). Despite this transaction’s high stakes and deliberate nature, prior research has yet to offer conclusive answers. Understanding how real estate investors behave is essential because real estate is becoming a more popular asset class in portfolios (Kumar and Vergara-Alert, 2020 ). The recent trends show that the Indian real estate sector is set to grow at a tremendous rate according to a report by India Investment Grid (IIG). With the increasing popularity of easy investment vehicles like REITs, this sector will require a thorough understanding which provides motivation for this study. This study aims to delve into one of the crucial facets of behavioural research: behavioural biases that influence individual decision-making in real estate investment. This study is unique in the manner that no study exists to the best of the authors’ awareness that reviews existing research regarding the investment behaviour of real estate investors. This paper looks forward to compile and examine the existing research works that study behavioural biases in the real estate sector to provide a concise summary and address the following research questions:

RQ1: What are the study trends in behavioural biases in real estate investing in terms of year of study, sample country, journal of publication, statistical approach, data type, and the number of papers on a particular bias?

RQ2: What does content analysis reveal about the knowledge imparted by previous research works for different behavioural biases?

RQ3: What research gaps are still present and possible future research agenda in the context of behavioural biases in the real estate investment sector?

The flow of the paper is as follows: The paper begins with “Introduction” which introduces the work. In this, Fig. 1 represents the pictorial presentation of how this paper has been organized. Section “A prelude to behavioural biases in real estate investment” briefly talks about different behavioural biases that exists in real estate investment. Up next, “Research method: literature search approach” illustrates the research methodology adopted. In the section “Literature review: classification and analysis of the literature”, the articles are reviewed and analysed, after which, “Content analysis” section discusses each bias in detail. The section “Results and discussion” discusses the findings. In the end, “Conclusion and future scope” concludes the present literature review and gives the future research agenda.

This figure shows the pictorial presentation of how the paper has been organized into various sections.

A prelude to behavioural biases in real estate investment

The term “behavioural bias” describes a pattern of judgmental variation that occurs in particular settings and can occasionally lead to perception alteration, inaccurate judgements, illogical interpretation, or irrationality. Biases are the inclination towards error (Shefrin and Statman, 1985 ). Going by the definition in the dictionary, biases, and flawed cognitive reasoning and thinking draw similarities; nevertheless, it is more accurate to say that they are caused by poor reasoning influenced by feelings or emotions. Understanding the effect of behavioural biases on investment decisions is essential. With its understanding, investors and their advisors may be better equipped to achieve their objectives and enhance economic outcomes. Timely recognition of behavioural biases can help in avoiding potential financial disasters.

A variety of behavioural biases influence investors while they make investment decisions. The lack of information or inability to interpret it gives rise to several biases. Overconfidence is a cognitive bias propagated by Odean et al. ( 1998 ). In the presence of this bias, people tend to exaggerate their skills, knowledge, and predictions while downplaying the possibilities of future uncertainties (De Bondt and Thaler, 1995 ). Overconfident people feel their judgement is more trustworthy than others (Jain et al., 2015 ). Under the influence of the representativeness heuristic, investors try to associate the past performance or information of a certain market condition or firm with the general notion that the same outcome will happen in the future. In the event of a lack of information, our brain often tries to complete the mental illustration by combining prior knowledge and thinking to deduce the probability of a certain outcome. E.g., when purchasing a home, buyers frequently assess the risk of the property and the potential return on their investment by comparing the price to that of comparable homes in the area (Kahneman and Tversky, 1979 ). Similar to this bias, investors also suffer from Gambler’s fallacy. It is also known as the Monte Carlo fallacy. It occurs when someone mistakenly thinks that the outcome of a prior event or series of events will determine how probable an upcoming random event is to occur (Malik et al., 2021 ). When investors cannot deduce logical reasoning from the market information, they tend to show herding bias. Like sheep walking in herds, investors often blindly follow what other or larger groups of investors are doing without applying logical deduction of those activities (Kahneman and Tversky, 1979 ). It has been noted that investors who suffer from this prejudice frequently consult brokers, friends, and co-workers before making an investment decision. Apart from the information itself and its deduction, the timeline of the information availability and the theme of presenting that information is also important. In availability bias, decision-makers favour the most recent information and events they can access rather than considering other options (Cascão et al., 2023 ). According to framing bias, biased information presentation might alter the investor’s opinions. Investors avoid risk when information is presented positively to ensure profits. However, they will accept the risk to prevent losses when the same information is presented in a negative frame. Lastly, people also tend to make irrational decisions due to mental accounting bias, where they categorize money differently based on subjective standards, frequently prompting illogical spending and financially unwise investment choices (Thaler, 1985 ; Enslin et al., 2022 ).

Humans tend to perceive profits and losses differently. This anomaly gives rise to three behavioural biases: disposition effect, loss aversion and regret aversion. When deciding whether to sell or keep an investment, losing investments are often held onto too long by investors. Rather than holding profitable securities for long periods of time, they often dispose of them prematurely. This is known as the disposition effect (Basana and Tarigan, 2022 ). According to Shefrin and Statman ( 1985 ) winning stocks should be sold, and losing stocks should be retained. Loss aversion was coined by Benartzi and Thaler ( 2000 ). It occurs because people react differently to guaranteed profits and guaranteed losses. People prefer not to take risks when there is a guarantee of profit, but they are willing to take risks if there is a potential of losing. This demonstrates that they value loss certainty more than loss uncertainty. According to the idea of regret aversion, when people regret a choice, it has a bigger impact on subsequent decisions. As a result, investors are either encouraged to take more risks or discouraged from making risky investing decisions. This is done to avert any feelings of regret further (M. J. Seiler et al., 2008 ).

Reluctance to change or relying stubbornly on some information that has been previously received also causes behavioural biases. Anchoring bias is one such bias where investors tend to base their decisions on an illogical price, which is sometimes meaningless. Because of this bias, investors frequently set prices based on previous knowledge of purchasing and selling. This leads to mistiming of the market and results in investors buying or selling securities at exorbitant prices. Investors may also miss out on profits if they fail to meet the price they set to buy or sell securities (Northcraft and Neale, 1987 ). Investors often get affirmation about their decision by seeking information or evidence that supports or confirms it, often from their peer group or friends. This tendency gives rise to confirmation bias (Gallimore, 1996 ).

Investors also tend to favour what is known to them while attempting to shun the unknown under the familiarity bias (Seiler et al., 2013 ; Ambrose and Shen, 2023 ). To this, the endowment effect was coined by Kahneman et al. ( 1990 ). People place too much attention on their current beliefs and are unwilling to modify them. Due to this, they pass up even the most lucrative investment prospects. Investors also tend to prefer investing in securities of domestic countries rather than diversifying it with foreign investments. This is known as home bias (French and Poterba, 1991 ; Lin and Viswanathan, 2016 ; Riff and Yagil, 2016 ; Coën et al., 2021 ).

Research method: literature search approach

The author has systematically reviewed the literature to analyse the articles published on behavioural bias in real estate investment. Systematic literature review (hereafter, SLR) is regarded as the most illuminating and scientific compared to other reviews (Snyder, 2019 ; Paul et al., 2021 ). SLR attempts to address a research question, typically regarding the state of a certain field of study (Kraus et al., 2020 ; Muthuri et al., 2020 ). Another significant aspect of SLR is that it provides solutions to queries that may mislead the findings if only one study is considered (Petticrew and Roberts, 2008 ).

The studies in behavioural finance were initiated in the year 1980. To ensure proper inclusion of the behavioural finance literature, the paper solely focuses on the studies conducted between 1980 and 2022, which have studied one or multiple biases in their paper. The literature was drawn from two leading databases, “Scopus” and “Web of Science”, thereby enabling the analysis of high-quality studies in concerned areas.

The “Preferred Reporting Items for Systematic Reviews and Meta-Analyses” (PRISMA) criteria, which called for the use of keywords to search for pertinent works in the database, were used in the systematic review procedure (Liberati et al., 2009 ; Li et al., 2022 ). The keywords were chosen after carefully examining previous articles. The keywords were searched on both the database on October 12, 2022.

Initially, 16,991 papers were identified relating to keywords searched in the above-mentioned databases. The search criteria entered to limit the literature search in the field: (“Overconfidence” OR “Loss aversion” OR “Regret aversion” OR “Herding” OR “Psychological bias” OR “Cognitive bias” OR “Emotional bias” OR “Representativeness” OR “Anchoring” OR “Mental accounting” OR “Disposition”) AND (“Real Estate” OR “Housing” OR “Property”). Further, we considered the following criteria for the inclusion of the article in our study:

Articles having the search keywords in the article title, abstract and keywords.

Subject: Economics, econometrics and finance; Business, management and accounting; social sciences in Scopus. Management; business; business finance, economics in web of science.

Document type: Article

Articles published in English language only.

Taking these criteria into account, 15,734 papers were excluded through the database search, and 125 duplicate papers were eliminated. Less adequacy of titles and abstracts resulted in the exclusion of 727 and 312 articles, respectively. This resulted in 93 papers being available for full-text analysis, of which 5 papers did not have full-text availability, and 2 papers did not relate to the theme of the study and hence were excluded. Therefore, the final sample counted 86 most relevant articles for the study. The flow chart for the review of the article following the PRISMA framework is given in Fig. 2 .

This figure illustrates the PRISMA framework adopted in the study. It shows the count of articles taken up at every stage along with the exclusion criteria and number of excluded articles.

Literature review: classification and analysis of the literature

A total of 86 research papers were examined and categorized based on the year of publication, country of study, source of data collection, statistical techniques used, and citation analysis. This section presents the results of the reviewed literature.

Year of publication

Figure 3 (Table 1 in annexure) represents the distribution of the articles published from 1980 to 2022, according to chronological order, with each year being further divided according to the behavioural biases studied in those years. Studies on behavioural bias in real estate started in 1987, and in recent years studies on this topic have gained momentum. An interesting takeaway from the distribution of articles over time is that the number of articles jumped significantly post-2010. On deeper analysis, it was observed that around 50% of the studies after 2010 were from the USA. This can be attributed to the fact that the housing market crash that occurred in 2008 caused a severe economic recession, and thus it could have led the researchers to delve into the arena of real estate investment so that a better understanding can be offered to minimize such risks in future (Crosby et al., 2018 ). The recent development in the general sentiment of people investing in assets and buying real estate as a means of investment can be seen from the growth in the number of studies. This investment interest, in general, drives the need for a deeper analysis of this avenue. Also, the availability of information for conducting studies has become more accessible due to digital platforms and databases. The graph further shows the distribution of studies according to biases year-wise. This demonstrates that anchoring bias has always been a priority almost every year. Loss aversion has been studied a lot in recent years. Other biases have slowly gained momentum, showing a vast area that still needs to be explored.

It shows the distribution of articles over the period of 1980–2022. It also highlights the number of articles corresponding to different biases for a particular year.

Journal of publication

This analysis identifies the key journals and publications in this area. Figure 4 (Table 2 in annexure) shows 86 research papers were collected from 45 journals. Out of these, 15 journals had two or more than two publications. Further, it is interesting to note that, Journal of Real Estate Finance and Economics, Journal of Property Research, Real Estate Economics, International Journal of Housing Markets and Analysis and, Journal of Real Estate Research published 32 papers on biases in real estate investment. Journal of Real Estate Finance and Economics emerges as the highest publisher with 9 papers, followed by Journal of Property Research with 7 papers.

The analysis shown through this figure highlights the key journals in the field of behavioural biases and the number of articles in those journals.

Country of study

Figure 5 (Table 3 in annexure) shows the bifurcation of articles based on the country where the authors have collected the data or chosen the geographic domain for the studies. The visualization shows that developed countries like the USA and the UK have been the primary locations for most studies. On the other hand, developing countries have been targeted less, resulting in fewer studies. The primary reason for such an anomalous distribution of study is that in developed countries, real estate transaction records are readily available in the public domain, and most transactions are institutional, resulting in more accessible data collection. Moreover, the large number of such transactions results in an abundance of information for statistical analysis. In developing countries like India, most real estate transactions are on a personal level, with agents working independently, resulting in less publicly available information. Another possible factor is a more generalized one regarding research works. The developed countries have much more funding availability and understanding of the long-term effects of proper research work in these sectors. Developing or low-income countries have a comparative shortage of funds for research and other glaring issues to deal with rather than understanding the long-term benefits of research. This causes an abundance of fruitful research in developed countries while shortage in their counterpart countries.

The figure shows how the articles are divided based on the country where the authors have collected the data or have chosen the geographical domain for their study.

Type of data used

Analysis of the literature on the type of data helps us identify the focus of past research. Figure 6 (Table 4 in the annexure) shows the distribution of the study according to the type of data collected for each bias. Out of 86 studied papers, some articles discussed multiple biases, which made an addition to the primary and secondary list. This table shows that while anchoring bias has a healthy distribution between primary and secondary data, most of the other biases either have more primary and less secondary data-based articles or vice versa. We see that herding and loss aversion have a large number of secondary data-based articles and very less studies have used primary data. The importance of primary data-based articles is that they take the real opinions of the target population and hence are closer to real-life scenarios while secondary data-based articles are necessary to test the models and hypotheses on a large sample size to prove the robustness.

The figure illustrates the distribution of articles based on the type of data used (primary or secondary).

Statistical techniques

This section explores the bifurcation of the studied articles according to the statistical technique employed in them. This exploration is essential in showcasing this avenue’s most sought-after and expansively used method. Figure 7 (Table 5 in annexure) shows the number of articles for various statistical techniques found in the studies and highlights that Regression analysis has been used most times (23 out of 86 selected papers). Different types of regression, such as logit regression, probit regression, linear regression, ordinary least squares, and multiple regression, were used. Only some studies have used multiple techniques such as correlation, chi-square, factor analysis, etc. Articles were not excluded or accepted based on statistical technique; however, during analysis, it was found that only three relevant articles were based on qualitative techniques, and the rest were based on quantitative techniques.

The figure illustrates the different statistical techniques used by the researchers to study behavioural biases.

Figure 8 shows the distribution of biases according to the statistical techniques used in the articles. For almost all biases, the majority of the studies are regression-based. Regression is preferred in predictor-outcome-based model studies due to its simplicity in application and numerous statistical software providing easy regression analysis ranging from MS Excel to IBM SPSS (Fumo and Rafe Biswas, 2015 ). The studies have used multiple linear regression with more than one predictor variable. The regression models give easy access to isolate those predictors that cause problems to the model and find a mathematical relationship that can be used in future works (Rencher, 2005 ). They are also well-proven for hypothesis testing, which gives insights into whether or not what a researcher thinks is correct (Goldstein et al., 1979 ). We can see that more rigorous techniques like SEM are used in a minimal number of articles, and fewer articles have used unique methods like IRT or vector auto-regression.

The figure illustrates the distribution of articles according to the bias studied and the statistical technique used in them.

Another interesting thing to note from this analysis is that articles on qualitative methods are much fewer. As explained in the work of Rust et al. ( 2017 ), there is a widespread misbelief that quantitative analysis is more critical due to clear statistical outcomes than qualitative methods. Qualitative methods are essential because they help in gaining a deeper understanding of the theories involved in some particular area of research so that we are well prepared before applying statistical techniques (Gutmann, 2014 ). Ignoring the qualitative approach is like ignoring the theory classes before going for practical. While the quantitative approach works towards establishing the robustness and validity of the model, qualitative methods help in establishing the credibility and logic of the model. We can thus infer that there is a need to focus more on theory development and qualitative work with regard to biases so that a balance between validity and credibility is achieved (Rust and Hughes, 2018 ).

Identified biases vs. number of papers

Behavioural biases have been examined in this section through the research findings of the chosen papers. Figure 9 (Table 6 in annexure) shows that 37 papers are available on anchoring bias, 24 on loss aversion, 18 on herding, and 11 on overconfidence bias. However, a dearth of studies on the home bias, familiarity, framing, endowment effect, and disposition effect in the real estate context gives an inconclusive finding.

The figure shows the number of identified articles talking about a particular bias.

Citation analysis

In this section, we assessed various articles according to their citations for different biases to find the most pertinent and significant papers available. The citation was located using Google Scholar. We identified that 80 of the 86 selected articles are cited elsewhere. This confirms the reviewed article’s validity, suggesting that other researchers have deemed their work useful. We did not find any citations for 6 articles published recently. Table 7 (in the annexure) shows the articles on various biases with their citation counts. The authors have included only papers with more than 25 citations to avoid a long list of articles.

Content analysis

A research method for the objective, methodical, and quantitative description of communications’ manifest content is called content analysis (Burns and Berelson, 1952 ). The empirical results of earlier research investigations are disclosed using content analysis. In this section, the authors have systematically done the content analysis of different behavioural biases identified in the real estate investment literature. The biases having <5 papers are studied collectively under the “Other biases”.

Anchoring bias

Anchoring bias is a cognitive bias present in the real estate sector (Bao et al., 2021 ; Diaz et al., 1999 ) where people hold on to a reference point in the form of some information about the investment and act biased due to it (Yan and Bao, 2018 ). The initial listing price has been considered an important anchor where investors judge a property value based on the asking price first quotes. Such biasing is not only present with a novice like students (Silva et al., 2019 ) but also with seasoned professionals (Northcraft and Neale, 1987 ) and property fund managers (Lowies et al., 2016 ). Such asking price is also used to judge the property value and arrive at a price; however, anchoring barricades buyers to arrive at a fair price (Bao and Saunders, 2021 ; Bokhari and Geltner, 2011 ; Bucchianeri and Minson, 2013 ). Also, such anchors affect the decision-making of real estate investors (Chang et al., 2016 ; Hoxha and Hasani, 2022 ; Pandey and Jessica, 2018 ; Waweru et al., 2014 ) and negotiations that play in the transaction (Black and Diaz, 1996 ). Such negotiations are affected by round numbers, i.e., prices ending with more zeros. Buyers tend to form an anchor around a round number (Pope et al., 2015 ). The effect is persistent when buyers consider the previous purchase price as an anchor (Leung and Tsang, 2013b ). This anchor around the previous purchase price is also evident when owners have a property whose current value is less than the purchase price, causing them not to list the property and hold on to it (Lane et al., 2011 ). Along with the previous purchase price, sellers sometimes want to achieve break-even and thus form an anchor around it (Seiler et al., 2012 ). Also, this anchoring bias affects risk perception, which in turn affects the investor’s decision-making (Zhang et al., 2022 ).

Apart from pricing, other factors like age, annual income, gender, and information accessibility have been studied in relation to anchoring bias. Younger people have been identified to show higher levels of anchoring bias along with lower-income earning groups. Women also tend to offer more anchoring bias than men (M. J. Seiler et al., 2008 ; Hjalmarsson and Österholm, 2021 ). The availability of information on property value plays an essential role in decision-making. Buyers tend to form anchors when they get information or reference points; sellers can use this tendency to mould buyers in their favour (Paraschiv and Chenavaz, 2011 ). Investors with price uncertainty are thus more likely to fall prey to anchoring bias (Chang et al., 2016 ). Searching the internet prolifically can also cause investors to rely deeply on information received and form and anchor around it (Beracha and Wintoki, 2013 ). However, investors also sometimes tend to anchor around previously or easily available information (Cascão et al., 2023 ). Sellers also seem to consider local fundamentals during the first sale and anchor the initial price in accordance with it (Clapp et al., 2020 ).

The research by Cheung et al. ( 2022 ) revealed that the capital value (hereafter, CV) evaluation in pricing provided by governments in several nations has some influence on the transaction price (TP). For used properties, TP and CV demonstrated a bi-directional, lead-lag connection. Moreover, the study by Ali et al., ( 2020 ) and Klamer et al. ( 2017 ) showcased that property evaluators suffer from anchoring bias, and tend to form their anchor around the previously transacted price. The impact of these government laws and initiatives on the time required to accept such offers was examined, and it was discovered that if sellers and agents effectively utilize them, the time needed to finalize deals is reduced (Arbel et al., 2014 ). However, Diaz and Hansz ( 2001 ) claim that as long as the appraisers are working in a field, they are comfortable with, an anchor (anonymous expert value) does not affect real estate valuations. However, when appraisers value the property in unfamiliar geographical areas, anonymous expert opinion affects their valuation (Diaz and Hansz, 2001 ). Sometimes, the clients and customers have thinking about the price or value of a property and thus the evaluators get under pressure forming an anchor around that price. Thus the customer influence also causes anchoring bias (Lee et al., 2022 ; Nwuba et al., 2015 ).

Researchers have also examined the property location as a factor for anchoring bias. They postulated that the distance of the property from the buyer’s location may significantly impact the price paid and thus support the anchor in the form of location (Clauretie and Thistle, 2007 ). Buyers who look into a property far away from them have to spend considerable time looking for information and rely on secondary sources since they are not present in that geographic area. This search constraint resulted in paying higher prices than local buyers (Lambson et al., 2004 ). This evidence is further strengthened by an expansive study by Ling et al., ( 2018 ) who used a large sample of 114,588 sales transactions to see this effect. Differentiating the benefits that local buyers get over distant buyers, it is seen that local buyers have an advantage of easily available information and access to options open in the market in the near vicinity. Moreover, people hailing from high-priced property areas will tend to negotiate in and around that reference price point resulting in paying more than what would have been paid by a person hailing from a lower-priced area. This confirms that location acts as an anchor causing buyers to spend more or less with respect being far or near to the target property (Zhou et al., 2015 ).

Various anchors have been studied to determine their effect on the housing market, including the initial listing price of the property, its distance from investors or buyers, government valuations, and public information. However, after analysing these anchors separately, it is important to analyse the real-world picture of real estate investment. A variety of factors influences real-world housing prices intermixed together. It may be worthwhile to explore the combined effect of these anchors in the future and see which anchors tend to dominate the projecting of real estate prices. Despite the complexity of future work, it should yield a more accurate model and promote a multi-directional approach in the housing market.

Loss aversion

Loss aversion arises when people have different perceptions of similar amounts of profit or loss in transactions (Bao et al., 2021 ; Yan and Bao, 2018 ; Mayer, 2011 ). Genesove and Mayer ( 2001 ) studied loss aversion as a behavioural bias for the first time. They explained that homeowners treat gains and losses differently and are averse to the potential nominal loss. They will tend to wait for a potentially high-paying customer to avoid the nominal loss they may have experienced earlier or anticipated (Waweru et al., 2014 ). Owners expecting loss set higher listing prices (Anenberg, 2016 ; Liu et al., 2018 ) and such houses that were expected to sell at a loss sold at an increased price (Greenaway-McGrevy and Haworth, 2020 ). Also, the prices are affected if sellers have prior loss experience (You, 2020 ). This effect of loss aversion is more predominant when considering commercial real estate and more seasoned investors. The effect in commercial real estate has been adjudged to be more predominant because there are ample amounts of transactions happening and thus, investors and sellers have more reference points to compare prices and, thus, high loss aversion bias (Li and Wan, 2021 ). Even in commercial real estate, the effect is more for more sophisticated and experienced investors because their experience of transactions helps them to be more averse to potential losses (Bokhari et al., 2011 ).

This behavioural bias has also been an antecedent in housing mobility, wherein people move to newer locations to avoid nominal loss (Engelhardt, 2003a ; Steegmans and Hassink, 2018 ). The asymmetric preference for loss and gain makes loss aversion an important factor and helps predict housing prices (Anenberg, 2011 ; Leung and Tsang, 2013a , 2013b ; Hayunga and Pace, 2017 ). It is also found that housing loan borrowers are affected by loss aversion and sometimes willingly default to repay (Bhutta et al., 2017 ). However, Pandey and Jessica ( 2018 ) presented a contradicting view and said that loss aversion did not influence real estate investors.

Further studies have tried to find the factors influencing loss aversion like time dependency, experience, owners’ race, and usage of agents. Buisson ( 2016 ) suggests time horizon to be an important factor in determining the degree of loss aversion. When the time horizon is short, sellers tend to be more risk-averse and are willing to accept lower prices in order to mitigate the loss that they perceive to be impending. However, when the time horizon is long enough, they tend to wait for a higher price or may exit the market and are less prone to this bias. In addition, the race of owners or usage of agents in transactions does not seem to affect the asking price, but past experiences of loss do tend to have a significant impact (Hayunga and Pace, 2017 ).

While sellers and owners tend to show this bias and have been studied extensively, the effect of loss aversion on selling prices is more magnified when it is associated with real estate developers (Bao et al., 2021 ). Real estate developers tend to be risk averse in selling new real estate, and the increase in price gets delivered down to the ultimate price that homeowners will have to pay to acquire the property. To differentiate the effect, private firms tend to have a greater effect than state-owned firms, and unlisted firms have a greater effect than listed firms (Bao et al., 2021 ). Loss-averse sellers tend to deter sales during the downfall of the market (Tu et al., 2009 ) and negotiate to reduce the risk of loss rather than maximizing profit (Zillante et al., 2019 ). This causes the difference between the price sellers are willing to accept and the price buyers are willing to pay (Gong et al., 2019 ). It also causes many sales to expire (Carrillo, 2013 ).

Despite the presence of loss aversion in commercial real estate (Li and Wan, 2021 ), more data on commercial transactions is necessary to fine-tune the findings. This still needs to be approached and thus demands future work. Another interesting study would be to exploit the time horizon effect suggested by Buisson ( 2016 ) on private firms since they tend to show a higher degree of loss aversion (Bao et al., 2021 ). This behavioural bias has been studied and affirmed to be present with both investors and developers. However, a comparative study between investors and developers can be done to see the comparative effect on real estate prices, which shall give insights into the comparative importance of behavioural bias of investors and developers or buyers and initial sellers.

Regret aversion

Regret is one of the most common feelings that is experienced in the investment sector, where investors often feel regret after they fail to capitalize on probable profit or incur a significant loss. It is human nature that they try to avoid regret by using any comforting means or thinking. Investors try to comfort themselves after a loss by applying a different way of thinking. This, however, has been shown to have detrimental effects afterwards where they tend to hold on to bad investments and amplify the loss later (M. J. Seiler et al., 2008 ).

The studies of Waweru et al. ( 2014 ), Pandey and Jessica ( 2018 ) and Hoxha and Hasani ( 2022 ) confirm the presence of regret aversion bias and how it affects investor decision-making. However, real estate prices do not seem to be impacted by regret aversion bias (Malik et al., 2021 ). A different viewpoint is given by Seiler and Seiler ( 2010 ) who studied regret aversion in the real estate market and concluded that a large majority of people do not show regret aversion bias and perceive a forgone profit as a larger issue than unawareness about a potential gain. They also present that single women tend to show higher regret aversion. Wangzhou et al. ( 2021 ) suggested that regret aversion bias affects risk perception, and financial literacy weakens the relationship between regret aversion and investment decision-making, indicating that people who tend to be financially more proficient can overcome the regret they feel and make more informed decisions rationally.

There has been limited research on regret aversion, and the modelling and analysis techniques have yet to be developed. Therefore, a more extensive sample study could be conducted to investigate this behavioural bias. Despite regret aversion being confirmed by some researchers when it comes to housing decisions, its effect on housing prices has only been studied once with a negative outcome. More research will likely be beneficial since housing decisions usually result in price predictions.

Herding behaviour is a widespread phenomenon across investment regimes where many investors seem to follow other investors leading to poorer investment decisions and mass trading in one direction, causing market instability (Kinatta et al., 2022 ). Such behaviour exists in the housing market (Cascão et al., 2023 ) and the mortgage loan market (Martins et al., 2020 ). Housing prices have been said to be much more volatile like stock prices. Herding bias has been adjudged as a possible explanation for fluctuations in house prices (Hott, 2012 ) across 7 OECD countries. One possible factor behind herding behaviour is the adverse sentiment (Philippas et al., 2013 ) and social and normative influences which cause home buyers to herd (Susanto and Njo, 2020 ).

The importance of housing investment has been explained by Tan ( 2022 ) and Talpsepp et al. ( 2021 ). While studies could not find any correlation between gender and herding behaviour, people of younger age and older people had moderate to low levels of herding bias. Also, people of a commerce background tend to show low herding behaviour (Talpsepp and Tänav, 2021 ). Herding behaviour has been studied for different categories of people, and institutional investors have also been discovered to show herding behaviour (Lantushenko and Nelling, 2017 ). This behaviour is also demonstrated among real estate evaluators who seem to trust and move toward the valuations done by their peer group (Ali et al., 2020 ). An important finding is that the occurrence of such behaviour is not on the organization level but according to property type. Fund managers, however, do not exhibit this behaviour due to a highly volatile and performance-pressure market which causes them to be highly orthodox in their decision-making approach leading them away from herding behaviour (Lowies et al., 2016 ). Herding is observed to be on the lower side, with institutional investors and low uncertainty of asset value (Ngene and Gupta, 2022 ). The authors further suggest that since herding induces market volatility and instability, governments should implement policies and regulations to curtail this behaviour.

Herding is said to be present and varies across regimes, geographical regions, and market conditions (Ngene et al., 2017 ). Many researchers have tried to study this behaviour along with different market conditions to see the effect. Philippas et al. ( 2013 ) started the study in this direction using RIET and concluded that investors tend to show herding behaviour during a turbulent market, with it becoming stronger in a declining market (Zhou and Anderson, 2013 ). Further, the market crash caused strong herding behaviour. Such market conditions further caused positive and negative herding, where negative herding was observed during volatile markets and positive during the market crash regime (Babalos et al., 2015 ). This observation is confirmed by Akinsomi et al. ( 2018 ) who studied the same across three market regimes which yielded that herding behaviour was substantial during the low volatility regime, shifting from anti-herding during high volatility to low volatility. Ro et al. ( 2019 ) also confirm that herding is more robust in up than down market. A different viewpoint is suggested by Lin et al. ( 2018 ) who say that spurious herding behaviour is present during a rising market which is contradictory to previous works.

While herding bias has been studied for market investors, such a study has to be extended to other market players like developers, agents, and fund managers. Such a study could further pave the way for determining the effect of herding bias on the pricing of properties. Another future direction could be to exploit the findings that suggest that herding is related to the education level of investors to find the relationship with property type to see if the level of education causes any moderation. In contrast, investors are segregated based on the property type they are dealing in. Martins et al. ( 2020 ) suggest that Disaster Myopia is observed in some European countries, so it can be intriguing to study whether such short-sightedness for favourable market conditions has changed before and after the pandemic. Two more avenues for future work in this area could be to see the effect of financial literacy on herding behaviour as Talpsepp et al. ( 2021 ) suggest that people with commerce education tended to be less prone to herding due to their knowledge of finance and assessing the relation of herding with a population of the region concerned in order to explore the possibility as suggested by Ngene and Gupta ( 2022 ).

Overconfidence

Investors often judge their abilities to be superior or more capable than they are, which affects investment intentions and often leads to bad transactions and losses (Hoxha and Hasani, 2022 ). This cognitive bias has thus been studied to determine the effect on real estate investment decisions. Many researchers have used REIT instead of real estate transactions to study this factor. Eichholtz and Yönder ( 2015 ) have studied this bias for the first time, exploring the effect of overconfidence on trading activity and investments in real estate. They considered investor trading and holding decisions on behalf of the study objectives and concluded that overconfident CEOs tend to invest more than their counterparts and sell less. In the investment arena, it is important that investors can predict the return they expect, and thus different methods are used to do that. On comparing dividend growth theory with overconfidence and self-attribution bias, it was found that the latter affects return predictability more than the former (Chen et al., 2022 ). Not only investors but property evaluators also tend to show more than required confidence in their abilities when evaluating the price of a property (Ali et al., 2020 ). This also causes variations in the valuations done by different evaluators for a similar property (Lee et al., 2022 ).

Housing prices have been another important area that has been studied in relation to overconfidence bias to see the cause–effect relationship. Hwang et al. ( 2020 ) confirm that overconfidence in UK households is present with significant evidence. Malik et al. ( 2021 ) affirm the effect of investors’ overconfidence in real estate prices. Income has been studied as an important demographic variable that affects overconfidence, and results show that higher income causes higher levels of overconfidence among investors (Cascão et al., 2023 ).

While most of the studies have been unanimous on the fact that overconfidence has some effect on investment attributes, Pandey and Jessica ( 2018 ) differ and conclude that it does not significantly influence property investment decisions. Overconfidence bias has been challenging to study for real estate due to the requirement of many high-frequency transactions, which are not easy to find in this sector. Also, these conditions cannot be simulated in laboratories. These things have contributed to the barriers in studies for this bias (Bao and Li, 2016 ).

Education and annual income of investors have been studied and affirmed to be important factors in behavioural biases. It can thus be interesting to see the effect of these two factors on overconfidence. Further, the overconfidence factors like overestimation and over placement apart from over precision, can be included in the proposed model (Hwang et al., 2020 ). To provide some direction to the work of Pandey and Jessica ( 2018 ) a larger sample could be used to test the IRT model since, for more robust findings through IRT, a sample size of 500–1000 is recommended (Finch and French, 2018 ) and the considered sample size in their work is 543 which is on the lower threshold. This can be interesting because their work contradicts other works’ findings, suggesting that overconfidence has a significant influence.

Other biases

Apart from the biases discussed above, the rest of the 10 biases have been studied less and thus have very little research with respect to real estate investments. Availability bias is another bias that is related to information availability. It explains that people tend to give weight to the most easily and readily available information for making decisions. Investment decisions in real estate are also not diverged from this bias, and they do get influenced by availability heuristics (Cascão et al., 2023 ). However, Cascão et al. ( 2023 ) concluded in their study that the effect is not fully confirmed due to the low variance of the model they hypothesized. Another interesting finding of their work was that women tend to display higher availability heuristics. Such dependency on readily available information causes people to be more sensitive towards price. Along with women, investors dealing in local properties also showed higher levels of availability bias (Waweru et al., 2014 ). The effect of time was considered in accordance with availability bias and while comparing the government-supported appraised prices (Capital Value) and actual sales price (Transacted Price), it was found that the effect of information diminished over time which supported the fact that availability bias exists and readily available information is preferred (Cheung et al., 2022 ). Such dependency on easily available information represents the myopic behaviour of investors which means that they are short-sighted in decision-making and consider only what is available to them within easy reach (M. Seiler et al., 2008 ; Pandey and Jessica, 2018 ).

Investors also tend to display confirmation bias wherein they want confirmation from their friends or colleagues over the fair price they have adjudged. They then tend to form an anchor or reference point around that price (Ali et al., 2020 ; Lee et al., 2022 ). However, this bias was said to be negligible among the professional property surveyors in a study conducted in the UK (Gallimore, 1996 ).

The presentation of information to investors also plays a crucial role in decision-making and investment intention in the form of framing bias (Hoxha and Hasani, 2022 ). It has been said that investors seem to perceive a similar piece of information differently if it is presented in a positive or in a negative way. Jin and Gallimore ( 2010 ) and Levy et al. ( 2020 ) established in their study that investors perceive a decrease in price to be more and a similar increase in price to be less if the information is presented to them in a negative or positive manner, respectively. They postulated that such asymmetry got exaggerated based on the property’s nearness to the investor. Kinatta et al. ( 2022 ) gave a different perspective on framing bias and said that investors who tend to analyse and iterate given information in different ways, such as to get different perspectives, tend to make better judgements and decisions.

Investors often tend to predict the outcome of certain events and expect higher than actual returns. They also tend to predict the outcomes based on the probability of return of prices from higher to lower and vice versa. This expectation of higher-than-normal returns affects the decision-making of real estate investors (Malik et al., 2021 ). However, this bias has also been studied less in the real estate investment environment. Apart from the work of Malik et al. ( 2021 ), other researchers have not found very conclusive evidence of gambler’s fallacy to be of importance. While Waweru et al. ( 2014 ) found that the gambler’s fallacy has a shallow impact, other works did not find any significant impact on the decision-making of real estate investors (Pandey and Jessica, 2018 ; Cascão et al., 2023 ).

Representativeness is a similar kind of behavioural bias where investors again try to predict the outcome of a certain event or investment based on the outcome of any event of a similar nature that has happened in the past. It is usually related to overstressing the good outcome of a past event and believing that another event of similar nature will also result in a good outcome (Cascão et al., 2023 ). This factor has been found to be one of the most dominant factors that affect the real estate decision-making process (Waweru et al., 2014 ; Pandey and Jessica, 2018 ; Hoxha and Hasani, 2022 ).

People often tend to compartmentalize their minds to treat different assets and investments differently and individually. Such compartmentalization can lead them to make improper judgements and losses. This happens when people allocate resources to specific assets without comparing or studying the interrelation with other options. It has been found to be negatively but significantly related to decision-making in real estate investment (Kinatta et al., 2022 ). This confirms the findings (Seiler et al., 2012 ; Waweru et al., 2014 ). The only divergence found is in the study of Pandey and Jessica ( 2018 ) who conclude that mental accounting does not have a significant impact.

Sellers try to sell their assets at places and times when return expectancy is high. This has been described as a disposition effect in behavioural biases. Quan ( 2002 ) posits that sellers will flock to places where they are most likely to get good buyers. He examined the difference between an auction and direct sales and found that buyers with higher search costs preferred auctions, while buyers with lower costs preferred direct sales. Thus sellers who desired better payoffs went to auctions. While most people tend to sell their property when returns are high, some sellers are willing to sell the property at the break-even point (Seiler et al., 2012 ). This also cascades down to investors’ willingness to sell a property based on the return. They tend to sell those properties that bring in more return but do not like selling those that have not performed well (Crane and Hartzell, 2010 ).

Some biases are linked to the psychological closeness of the investor with the property. People who look for investment or purchase a house intended for their stay make decisions differently due to emotional attachments. The same goes for sellers who attach value to the property if they stay there. This effect is known as the endowment effect (Tan, 2022 ). Investors also tend to invest in properties or areas known to them and avoid venturing into the unknown, thus displaying familiarity bias (Seiler et al., 2013 ). The limitation of the market thus causes hurdles in diversification and causes an increase in property prices in an area (Henneberry and Mouzakis, 2014 ). The owners who have properties with less current value as compared to past purchase prices suffer from familiarity bias and do not want to list them for sale at lower prices because they feel they are more familiar with the market (Lane et al., 2011 ). Also, as discussed for framing bias asymmetry in the perception of information based on the way of presenting it, this bias gets exaggerated if the investor is more familiar with the market, thus showing familiarity bias (Levy et al., 2020 ). This familiarity bias has sometimes been diffused into home bias, where investors prefer local markets. As seen in the study of Gibilaro and Mattarocci ( 2016 ), African and Asian countries tend to show higher levels of home bias and thus the least diversified portfolio. However, home bias does not affect returns to a great extent (Gaar et al., 2022 ). More experienced investors, however, may go to global markets or leave local markets when they perform poorly (Wright and Yanotti, 2019 ; Florentsen et al., 2020 ).

These biases, however, have been studied less, and therefore much future work can be done for better understanding. One such avenue is to explore different investor types, like institutional investors, developers, etc., so that a wider perspective is received. Also, such studies can be introduced again from time to time for the same sample so that the change in behaviour over time can be recorded and analysed. The latest and advanced statistical techniques can be evaluated with present study designs to validate the findings even more. In totality, these biases are yet open for expansive studies and explorations.

Results and discussion

The literature review of 86 studies examined behavioural biases in real estate investment. This section presents a few findings from the study that give a broad overview of the characteristics of existing literature in this field. There are also certain technological difficulties and research voids that call for additional contributions from the researchers.

Following an examination of the articles, it was found that there has been a significant increase in the number of articles looking at behavioural biases in real estate investment. Real estate has recently gained much attention as an investment sector. There could be various reasons attributed to this, wiz. It provides much diversity in an investment portfolio and is a physical asset. Also, behavioural analysis is important since real estate deals do not have tools, analysis charts, or statistical indicators in abundance like the stock market for example. Moreover, factors like emotional attachment to a dwelling place and housing being a roof over the head play a crucial role in decision-making.

Furthermore, the number of real estate investors has significantly increased in emerging economies in recent years. According to the India Investment Grid (IIG), the Indian real estate industry is expected to reach USD 1 trillion by 2030. Given a steep rise in real estate investment, there is a need to examine the behavioural biases of real estate investors in these countries. However, it is imperative to note that the aforementioned survey of the literature demonstrates that in the past, the majority of research work was undertaken to examine the behavioural biases in real estate investment, focused on developed countries. A possible explanation for this might be that the real estate market of developed countries is more organized, and data is easily available for research.

Upon analysing the number of articles for the biases identified, we see that anchoring bias has the most number of studies (37), followed by loss aversion (24) and herding behaviour (18). The rest of the biases have a very low number of studies to their name. While many studies on some biases have helped a great deal in deeper understanding, future works should target the unexplored biases and their interplay with the other deeper studied ones. Regression has been one of the most widely used statistical techniques in the examined studies and it has been time and again used extensively for establishing the relationships between two variables of interest. However, integrating real-life scenarios often leads to the formation of complex models due to the deeper interplay of many variables. Such complexities could be handled better using newer statistical techniques like PLS-SEM or IRT, as has been used in some studies. Therefore, future studies may use these techniques to give a more robust model that fits closer to real-life situations.

The factors that contribute to anchoring bias are initial listing price, government-influenced appraisals of properties, and the distance of the property from the investor (Cheung et al., 2022 ; Clauretie and Thistle, 2007 ; Northcraft and Neale, 1987 ; Pandey and Jessica, 2018 ). Such factors sway the bias of an investor towards a specific decision, and thus, anchoring heuristics influences both decision-making and property prices. Among the demographics, the age of investors, income group, and gender (women) tend to influence the anchoring bias (Hjalmarsson and Österholm, 2021 ; Kucharska-Stasiak, 2018 ). Future research should examine these factors in interrelation with each other to get a more robust and closer-to-real-world scheme of things.

Investors often treat loss and gains separately and thus hold on to poorly performing assets to mitigate the losses. Such effect was found to be more predominant for commercial real estate and with real estate developers (BAO and LI, 2016 ; Li and Wan, 2021 ). Loss aversion bias also gets affected by time horizon, and when investors have ample time to liquidate or sell an asset, they tend to wait longer, amplifying their losses (Buisson, 2016 ). Future studies could focus on exploiting this time horizon effect on different investor types and private firms which show higher loss aversion behaviour (Bao et al., 2021 ). The interconnection between investors and developers should also give interesting insights since the biased decision-making of developers magnifies the effect due to control over listing prices.

While it is suggested that regret aversion is an important factor in decision-making (Waweru et al., 2014 ; Pandey and Jessica, 2018 ), many researchers could not find any significant influence over decision-making and real estate prices (Malik et al., 2021 ; Seiler and Seiler, 2010 ). The review finds that regret aversion is studied quite less, and thus, very few models are available to conclude the effects. Future studies with larger samples and more factors could give a higher understanding and generalized results.

Herding behaviour has been an important bias not only in the real estate sector but more predominantly in stock markets. It has been confirmed to cause price fluctuations (Hott, 2012 ) with the bias being more prevalent during volatile or turbulent market conditions (Zhou and Anderson, 2013 ). Even institutional investors tend to show herding behaviour (Lantushenko and Nelling, 2017 ; Ngene and Gupta, 2022 ). Such behaviour can be attributed to people’s tendency to lose confidence in their understanding when conditions are adverse and prone to follow others. This is justified by the finding that people in commerce tend to herd less due to a higher understanding of financial situations. Future suggested works could thus see the effect of financial literacy and understanding on herding behaviour along with different market players like fund managers, developers, and buyers.

Investors tend to be overconfident in their knowledge or intuition of any transaction or investment which, often leads to losses. Firm owners with higher levels of overconfidence were found to sell less and buy more (Eichholtz and Yönder, 2015 ). Also, people with higher incomes tend to show higher levels of overconfidence (Cascão et al., 2023 ). Such behaviour could be explained by the fact that people tend to believe that their investments will reap larger than actual benefits, which causes them to liquidate their assets less and hold on to bad investments. Going by the effect of education as concluded in other biases, it could be interesting to see in future studies how education affects overconfidence along with the level of income.

Apart from the above-discussed biases, other biases have been studied less, and thus findings are yet to become conclusive without backing from more independent studies. Regarding availability bias, researchers have demonstrated that it affects investment decisions because it shows investors’ short-sightedness when they focus on easily available information (Pandey and Jessica, 2018 ). Moreover, the bias gets affected by time since the information is available and whether the investors are dealing in local or non-local properties (Waweru et al., 2014 ; Cheung et al., 2022 ). The assurance that investors get from asking their friends or colleagues also takes the shape of confirmation bias, which also facilitates anchoring bias (Ali et al., 2020 ). Gambler’s fallacy also has not been supported by many researchers (Waweru et al., 2014 ; Pandey and Jessica, 2018 ; Cascão et al., 2023 ) with only one study confirming the presence (Malik et al., 2021 ). Mental accounting has been shown to affect decision-making negatively (Kinatta et al., 2022 ). The three biases, namely, familiarity bias, the endowment effect, and home bias, are related to the closeness of the property to the investor, both emotionally and physically. The limited works in these avenues indicate that investors tend to be more interested in local properties (Seiler et al., 2013 ; Wright and Yanotti, 2019 ). Such findings can be attributed to the fact that people are more familiar with what they are close to regularly, and also, they are privy to much information that can be difficult for people who are far away. Framing variation has been shown to have positive outcomes (Kinatta et al., 2022 ) owing to the fact that it is always better to analyse a particular situation from different perspectives. Lastly, the disposition effect has been stated to be present where investors are always likely to sell a property when the return is significantly higher (Seiler et al., 2012 ). However, the findings cannot be termed very conclusive due to the lack of more studies. The future arena for these biases is wide open due to the lack of work. These future studies could utilize the interrelationships studied in other more avidly studied biases and venture into the underlying factors. Also, studies can be repeated over time to analyse the change in behaviour and check the time factor in the existing models.

Conclusion and future scope

Real estate investment has significantly gained momentum in recent years. It has been judged as a significant diversification in the portfolio of investors. Moreover, real estate has been emotionally important for people since they consider a roof over their heads necessary. Investors’ decision-making for real estate has been similar to other investments, leading to the study of behaviour and associated biases. Behavioural finance explains that people do not always make rational decisions based on numbers and facts. More often, they make irrational decisions based on their beliefs or understanding, which causes bias towards particular factors. Even though behavioural biases play a crucial role in decision-making, the study related to the effect of such biases in the perspective of real estate is still not abundant. Most of the focus has been on stock markets, and many of the identified biases have very little to negligible studies in their name. This has led the authors to systematically review the existing works related to behavioural biases in real estate investment to provide an excerpt of the works conducted. A systematic review of published research from 1980 to 2022 is presented in this study. Besides reviewing identified papers, the authors provide directions for future research in this area and shed light on the research gap in this area. In order to identify relevant studies, the PRISMA model was used, which resulted in 86 articles being included in the review. Various biases have been studied in detail with an analysis of the factors that influence those biases and their effect on various real estate parameters. The authors have provided explanations for the findings, identified which biases have been studied less, and provided future directions. Anchoring, loss aversion, regret aversion, herding, and overconfidence have been the most studied behavioural biases. In contrast, availability, gambler’s fallacy, representativeness, home bias, endowment effect, familiarity, mental accounting, and framing variation are less studied ones.

The studies identify initial listing price, previous purchase price, information accessibility, gender, age, government appraisals, and property distance from investors to be the most important factors influencing anchoring heuristics. Loss aversion is found to be more predominant in commercial real estate and seasoned investors affecting housing prices drastically if developers show loss aversion. Also, the time horizon is important, and investors with more time tend to be more loss-averse and sell late. Researchers have concluded that regret aversion influences decision-making but does not affect real estate prices. For herding bias, it was found that it has a great impact on housing price fluctuations and is more prominent during turbulent or volatile markets. Also, people having financial knowledge tend to show lesser herding behaviour. Coming to overconfidence, it was found that income affects overconfidence bias, and most of the researchers tended to use REIT to study this since physical real estate transactions are not so frequent to easily get the data. While other biases have also been studied and researchers provide some insights, the studies are too few for the authors to draw any conclusive evidence and make any comments. These biases do tend to show the effect of decision-making but there are yet open for more studies to support these findings.

This paper provides some important academic contributions to understand behavioural biases. It provides a comprehensive yet concise excerpt of the existing research works to give a wholesome understanding of the behavioural biases in real estate investment and the different factors affecting them. It also conceptualizes the effect of those biases on different parameters like housing prices and market conditions. This paper also presents some contributions to policy making. It shall help policymakers and real estate investment institutions strategize effectively to create an encouraging environment for real estate investors. As the study points out, the effect of different factors like closeness of the property from the investor, education level, and motives behind house purchase, investment institutions can develop programs that can help investors understand the rational point of view so that they can overcome the effect of biases to make correct decisions. Policymakers can make better policies like adequate valuation of property and limited time offers on financial instruments so that false reference points that can negatively affect the property price are minimized. Lastly, it can help investors to understand that they should evaluate the market information and rely on it more than their beliefs so that biases like herding behaviour and overconfidence are reduced.

Future researchers have an open area to explore the biases in real estate investment because human behaviour is a never-ending arena. Future works should consider the combined effect of various factors that affect the biases but have been studied individually. The real-life scenario will be much more complex as it will consist of multiple biases. Moreover, future studies should involve a multitude of players in this market like fund managers, actual sellers, buyers, institutional investors, and developers. This has been done in very few biases; the rest are yet to be explored. Apart from the future direction given for deeper analysis with respect to studied behavioural biases, there are a few suggestions that can align with the real estate landscape as a whole and help in a finer understanding of the underlying nuances. Firstly, future studies should concentrate on real estate investment in developing countries like India where there is a higher potential for growth and investors are more inclined towards real estate investment. Secondly, researchers should identify the biases according to the type of property, to get an idea of whether the investors of residential and commercial property act similarly or they are different. Further, future works should utilize more primary data as it is closer to reality and also real-time. While some biases like anchoring bias have a healthy distribution among primary and secondary, some biases like herding and loss aversion have a disproportionately high number of secondary data-based studies. Hence, primary data-based studies for these type of biases is necessary. Finally, besides direct real estate investment, biases of REIT investors should also be identified and they can be compared by the researcher. The rationale for doing such bifurcation is to get an idea of how investors’ behaviour differs when they invest in direct and securitized real estate. These directions should help potential researchers to expand the intellectual universe of behavioural biases and thus offer understanding for decision-making and investments.

Data availability

This is a review paper wherein the authors have analysed various articles by different authors who have been cited at required places. The cited information belongs to the authors mentioned in the reference section. The generated data is included in the paper.

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Singh, A., Kumar, S., Goel, U. et al. Behavioural biases in real estate investment: a literature review and future research agenda. Humanit Soc Sci Commun 10 , 846 (2023). https://doi.org/10.1057/s41599-023-02366-7

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Here's a short list of university centers and research institutions:

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• Case-Schiller Home Price Indices Monthly and quarterly reports covering major US housing markets compiled by Standard & Poor's.
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• Ferguson Partners Advisory Group/FPL - Real Estate Reports on Real Estate, REITs, and related topics.
• Inside Mortgage Finance News on mortgage industry, much of the data and reports are for subscribers.
• Institutional Real Estate Inc. See Resource Center tab for current available reports and perspectives on Real Estate.
• Jones Lang LaSalle Provides access to Global Reports.
• Knight Frank - Research Reports Covers many different types of markets (residential, luxury, office) in many global locales. Some reports require free registration before downloading.
• KPMG - Building, Construction & Real Estate Covers the US market.
• Lexis/Nexis Mortgage Fraud Report Issued annually. Free registration is required.
• NAI Global Commercial Real Estate Reports on Global Real Estate; report summaries are available for free under the 'Research' tab.
• Neighbor Works America - Reports & Studies
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Decoding innovation-led real estate demand in Oxford and Cambridge

As take-up from the science and innovation sectors accelerates in the global innovation powerhouses of Cambridge and Oxford, we analyse the specific real estate needs of rapidly growing sub-sectors such as AI, engineering biology and quantum computing. In today’s knowledge-driven economy, Oxford and Cambridge stand out as undisputed powerhouses thanks to their unparalleled strengths in science and broader innovation. Cambridge’s position as the world’s foremost cluster for patent applications and research citations based on population, coupled with Oxford ranking third globally on the same measure, underscores the remarkable intellectual prowess in these cities. Furthermore, the University of Oxford and the University of Cambridge consistently rank as the top UK institutions regarding the number of equity deals secured by spinouts and their respective spinout populations, cementing their status as incubators of cutting-edge ideas and entrepreneurial ventures.

Take-up and active demand

This critical mass of scientific and innovative capabilities has fuelled demand for appropriate real estate across both cities. Over the past five years, take-up from the science and technology sectors has grown by 3.4m sq ft, constituting 72% of the total take-up. Recent large-scale corporate investments, together with the opening of new research institutions, further amplify the real estate requirements emanating from the science and innovation sectors and the maturation of the supporting ecosystems.

Examples include, BioNTech expanding their global R&D activities with a new lab in Cambridge and plans to open an Oxford branch of the Ellison Institute of Technology, designed to tackle the world’s most pressing challenges. Looking ahead, the science and technology sectors account for 88% of named demand across both markets. These sectors also have 1.6m sq ft of lease expiries, impacting over 106 occupiers, occurring between now and the end of 2027.

Where next for innovation-led demand

Of course, science and innovation sectors are characterised by a vast array of companies and stakeholders, both interlinked and independent. This complexity means that the origination of demand and its real estate requirements are more nuanced than initially thought and are influenced by both local, national, and international opportunity and investment.

The biotech sector in Oxford and Cambridge saw a decline in venture capital funding during 2023 compared to the 2020-2022 boom. This downturn is impacting real estate decisions, but early signs of recovery are evident. In Q1 2024, biotech venture capital funding across both cities reached £311m, the highest since Q2 2022. Considering the Life Sciences sector as a whole, it is undergoing a significant transformation. Notable examples include the convergence of Technology and Life Sciences, heightened mergers and acquisitions activity and R&D investment driven by big pharmaceutical companies’ urgent need to replenish their product pipelines. This will generate fresh real estate demand as well as potential consolidation activity. The cities of Oxford and Cambridge are also witnessing increasing interest in cutting-edge sectors such as artificial intelligence, softwareas-a-service, quantum computing, and clean technology. These fields demand advanced real estate facilities and the same level of academic excellence that has fuelled the growth of the biotech sector. As these emerging sectors gain traction, they are poised to drive demand for specialised real estate solutions to support their unique requirements. Using several key variables, overlaid with our market insight and expertise, we can decode the intricate nature of science and innovationled real estate demand in both markets. This enables supply-side actors to further understand current requirements and also anticipate and accommodate the potential for exponential growth within the most burgeoning segments of the innovation economy.

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McKinsey Global Private Markets Review 2024: Private markets in a slower era

At a glance, macroeconomic challenges continued.

McKinsey Global Private Markets Review 2024: Private markets: A slower era

If 2022 was a tale of two halves, with robust fundraising and deal activity in the first six months followed by a slowdown in the second half, then 2023 might be considered a tale of one whole. Macroeconomic headwinds persisted throughout the year, with rising financing costs, and an uncertain growth outlook taking a toll on private markets. Full-year fundraising continued to decline from 2021’s lofty peak, weighed down by the “denominator effect” that persisted in part due to a less active deal market. Managers largely held onto assets to avoid selling in a lower-multiple environment, fueling an activity-dampening cycle in which distribution-starved limited partners (LPs) reined in new commitments.

About the authors

This article is a summary of a larger report, available as a PDF, that is a collaborative effort by Fredrik Dahlqvist , Alastair Green , Paul Maia, Alexandra Nee , David Quigley , Aditya Sanghvi , Connor Mangan, John Spivey, Rahel Schneider, and Brian Vickery , representing views from McKinsey’s Private Equity & Principal Investors Practice.

Performance in most private asset classes remained below historical averages for a second consecutive year. Decade-long tailwinds from low and falling interest rates and consistently expanding multiples seem to be things of the past. As private market managers look to boost performance in this new era of investing, a deeper focus on revenue growth and margin expansion will be needed now more than ever.

Perspectives on a slower era in private markets

Global fundraising contracted.

Fundraising fell 22 percent across private market asset classes globally to just over $1 trillion, as of year-end reported data—the lowest total since 2017. Fundraising in North America, a rare bright spot in 2022, declined in line with global totals, while in Europe, fundraising proved most resilient, falling just 3 percent. In Asia, fundraising fell precipitously and now sits 72 percent below the region’s 2018 peak.

Despite difficult fundraising conditions, headwinds did not affect all strategies or managers equally. Private equity (PE) buyout strategies posted their best fundraising year ever, and larger managers and vehicles also fared well, continuing the prior year’s trend toward greater fundraising concentration.

The numerator effect persisted

Despite a marked recovery in the denominator—the 1,000 largest US retirement funds grew 7 percent in the year ending September 2023, after falling 14 percent the prior year, for example 1 “U.S. retirement plans recover half of 2022 losses amid no-show recession,” Pensions and Investments , February 12, 2024. —many LPs remain overexposed to private markets relative to their target allocations. LPs started 2023 overweight: according to analysis from CEM Benchmarking, average allocations across PE, infrastructure, and real estate were at or above target allocations as of the beginning of the year. And the numerator grew throughout the year, as a lack of exits and rebounding valuations drove net asset values (NAVs) higher. While not all LPs strictly follow asset allocation targets, our analysis in partnership with global private markets firm StepStone Group suggests that an overallocation of just one percentage point can reduce planned commitments by as much as 10 to 12 percent per year for five years or more.

Despite these headwinds, recent surveys indicate that LPs remain broadly committed to private markets. In fact, the majority plan to maintain or increase allocations over the medium to long term.

Investors fled to known names and larger funds

Fundraising concentration reached its highest level in over a decade, as investors continued to shift new commitments in favor of the largest fund managers. The 25 most successful fundraisers collected 41 percent of aggregate commitments to closed-end funds (with the top five managers accounting for nearly half that total). Closed-end fundraising totals may understate the extent of concentration in the industry overall, as the largest managers also tend to be more successful in raising non-institutional capital.

While the largest funds grew even larger—the largest vehicles on record were raised in buyout, real estate, infrastructure, and private debt in 2023—smaller and newer funds struggled. Fewer than 1,700 funds of less than $1 billion were closed during the year, half as many as closed in 2022 and the fewest of any year since 2012. New manager formation also fell to the lowest level since 2012, with just 651 new firms launched in 2023.

Whether recent fundraising concentration and a spate of M&A activity signals the beginning of oft-rumored consolidation in the private markets remains uncertain, as a similar pattern developed in each of the last two fundraising downturns before giving way to renewed entrepreneurialism among general partners (GPs) and commitment diversification among LPs. Compared with how things played out in the last two downturns, perhaps this movie really is different, or perhaps we’re watching a trilogy reusing a familiar plotline.

Dry powder inventory spiked (again)

Private markets assets under management totaled $13.1 trillion as of June 30, 2023, and have grown nearly 20 percent per annum since 2018. Dry powder reserves—the amount of capital committed but not yet deployed—increased to $3.7 trillion, marking the ninth consecutive year of growth. Dry powder inventory—the amount of capital available to GPs expressed as a multiple of annual deployment—increased for the second consecutive year in PE, as new commitments continued to outpace deal activity. Inventory sat at 1.6 years in 2023, up markedly from the 0.9 years recorded at the end of 2021 but still within the historical range. NAV grew as well, largely driven by the reluctance of managers to exit positions and crystallize returns in a depressed multiple environment.

Private equity strategies diverged

Buyout and venture capital, the two largest PE sub-asset classes, charted wildly different courses over the past 18 months. Buyout notched its highest fundraising year ever in 2023, and its performance improved, with funds posting a (still paltry) 5 percent net internal rate of return through September 30. And although buyout deal volumes declined by 19 percent, 2023 was still the third-most-active year on record. In contrast, venture capital (VC) fundraising declined by nearly 60 percent, equaling its lowest total since 2015, and deal volume fell by 36 percent to the lowest level since 2019. VC funds returned –3 percent through September, posting negative returns for seven consecutive quarters. VC was the fastest-growing—as well as the highest-performing—PE strategy by a significant margin from 2010 to 2022, but investors appear to be reevaluating their approach in the current environment.

Private equity entry multiples contracted

PE buyout entry multiples declined by roughly one turn from 11.9 to 11.0 times EBITDA, slightly outpacing the decline in public market multiples (down from 12.1 to 11.3 times EBITDA), through the first nine months of 2023. For nearly a decade leading up to 2022, managers consistently sold assets into a higher-multiple environment than that in which they had bought those assets, providing a substantial performance tailwind for the industry. Nowhere has this been truer than in technology. After experiencing more than eight turns of multiple expansion from 2009 to 2021 (the most of any sector), technology multiples have declined by nearly three turns in the past two years, 50 percent more than in any other sector. Overall, roughly two-thirds of the total return for buyout deals that were entered in 2010 or later and exited in 2021 or before can be attributed to market multiple expansion and leverage. Now, with falling multiples and higher financing costs, revenue growth and margin expansion are taking center stage for GPs.

Real estate receded

Demand uncertainty, slowing rent growth, and elevated financing costs drove cap rates higher and made price discovery challenging, all of which weighed on deal volume, fundraising, and investment performance. Global closed-end fundraising declined 34 percent year over year, and funds returned −4 percent in the first nine months of the year, losing money for the first time since the 2007–08 global financial crisis. Capital shifted away from core and core-plus strategies as investors sought liquidity via redemptions in open-end vehicles, from which net outflows reached their highest level in at least two decades. Opportunistic strategies benefited from this shift, with investors focusing on capital appreciation over income generation in a market where alternative sources of yield have grown more attractive. Rising interest rates widened bid–ask spreads and impaired deal volume across food groups, including in what were formerly hot sectors: multifamily and industrial.

Private debt pays dividends

Debt again proved to be the most resilient private asset class against a turbulent market backdrop. Fundraising declined just 13 percent, largely driven by lower commitments to direct lending strategies, for which a slower PE deal environment has made capital deployment challenging. The asset class also posted the highest returns among all private asset classes through September 30. Many private debt securities are tied to floating rates, which enhance returns in a rising-rate environment. Thus far, managers appear to have successfully navigated the rising incidence of default and distress exhibited across the broader leveraged-lending market. Although direct lending deal volume declined from 2022, private lenders financed an all-time high 59 percent of leveraged buyout transactions last year and are now expanding into additional strategies to drive the next era of growth.

Infrastructure took a detour

After several years of robust growth and strong performance, infrastructure and natural resources fundraising declined by 53 percent to the lowest total since 2013. Supply-side timing is partially to blame: five of the seven largest infrastructure managers closed a flagship vehicle in 2021 or 2022, and none of those five held a final close last year. As in real estate, investors shied away from core and core-plus investments in a higher-yield environment. Yet there are reasons to believe infrastructure’s growth will bounce back. Limited partners (LPs) surveyed by McKinsey remain bullish on their deployment to the asset class, and at least a dozen vehicles targeting more than $10 billion were actively fundraising as of the end of 2023. Multiple recent acquisitions of large infrastructure GPs by global multi-asset-class managers also indicate marketwide conviction in the asset class’s potential.

Private markets still have work to do on diversity

Private markets firms are slowly improving their representation of females (up two percentage points over the prior year) and ethnic and racial minorities (up one percentage point). On some diversity metrics, including entry-level representation of women, private markets now compare favorably with corporate America. Yet broad-based parity remains elusive and too slow in the making. Ethnic, racial, and gender imbalances are particularly stark across more influential investing roles and senior positions. In fact, McKinsey’s research  reveals that at the current pace, it would take several decades for private markets firms to reach gender parity at senior levels. Increasing representation across all levels will require managers to take fresh approaches to hiring, retention, and promotion.

Artificial intelligence generating excitement

The transformative potential of generative AI was perhaps 2023’s hottest topic (beyond Taylor Swift). Private markets players are excited about the potential for the technology to optimize their approach to thesis generation, deal sourcing, investment due diligence, and portfolio performance, among other areas. While the technology is still nascent and few GPs can boast scaled implementations, pilot programs are already in flight across the industry, particularly within portfolio companies. Adoption seems nearly certain to accelerate throughout 2024.

Private markets in a slower era

If private markets investors entered 2023 hoping for a return to the heady days of 2021, they likely left the year disappointed. Many of the headwinds that emerged in the latter half of 2022 persisted throughout the year, pressuring fundraising, dealmaking, and performance. Inflation moderated somewhat over the course of the year but remained stubbornly elevated by recent historical standards. Interest rates started high and rose higher, increasing the cost of financing. A reinvigorated public equity market recovered most of 2022’s losses but did little to resolve the valuation uncertainty private market investors have faced for the past 18 months.

Within private markets, the denominator effect remained in play, despite the public market recovery, as the numerator continued to expand. An activity-dampening cycle emerged: higher cost of capital and lower multiples limited the ability or willingness of general partners (GPs) to exit positions; fewer exits, coupled with continuing capital calls, pushed LP allocations higher, thereby limiting their ability or willingness to make new commitments. These conditions weighed on managers’ ability to fundraise. Based on data reported as of year-end 2023, private markets fundraising fell 22 percent from the prior year to just over $1 trillion, the largest such drop since 2009 (Exhibit 1).

The impact of the fundraising environment was not felt equally among GPs. Continuing a trend that emerged in 2022, and consistent with prior downturns in fundraising, LPs favored larger vehicles and the scaled GPs that typically manage them. Smaller and newer managers struggled, and the number of sub–$1 billion vehicles and new firm launches each declined to its lowest level in more than a decade.

Despite the decline in fundraising, private markets assets under management (AUM) continued to grow, increasing 12 percent to $13.1 trillion as of June 30, 2023. 2023 fundraising was still the sixth-highest annual haul on record, pushing dry powder higher, while the slowdown in deal making limited distributions.

Investment performance across private market asset classes fell short of historical averages. Private equity (PE) got back in the black but generated the lowest annual performance in the past 15 years, excluding 2022. Closed-end real estate produced negative returns for the first time since 2009, as capitalization (cap) rates expanded across sectors and rent growth dissipated in formerly hot sectors, including multifamily and industrial. The performance of infrastructure funds was less than half of its long-term average and even further below the double-digit returns generated in 2021 and 2022. Private debt was the standout performer (if there was one), outperforming all other private asset classes and illustrating the asset class’s countercyclical appeal.

Private equity down but not out

Higher financing costs, lower multiples, and an uncertain macroeconomic environment created a challenging backdrop for private equity managers in 2023. Fundraising declined for the second year in a row, falling 15 percent to $649 billion, as LPs grappled with the denominator effect and a slowdown in distributions. Managers were on the fundraising trail longer to raise this capital: funds that closed in 2023 were open for a record-high average of 20.1 months, notably longer than 18.7 months in 2022 and 14.1 months in 2018. VC and growth equity strategies led the decline, dropping to their lowest level of cumulative capital raised since 2015. Fundraising in Asia fell for the fourth year of the last five, with the greatest decline in China.

Despite the difficult fundraising context, a subset of strategies and managers prevailed. Buyout managers collectively had their best fundraising year on record, raising more than $400 billion. Fundraising in Europe surged by more than 50 percent, resulting in the region’s biggest haul ever. The largest managers raised an outsized share of the total for a second consecutive year, making 2023 the most concentrated fundraising year of the last decade (Exhibit 2).

Despite the drop in aggregate fundraising, PE assets under management increased 8 percent to $8.2 trillion. Only a small part of this growth was performance driven: PE funds produced a net IRR of just 2.5 percent through September 30, 2023. Buyouts and growth equity generated positive returns, while VC lost money. PE performance, dating back to the beginning of 2022, remains negative, highlighting the difficulty of generating attractive investment returns in a higher interest rate and lower multiple environment. As PE managers devise value creation strategies to improve performance, their focus includes ensuring operating efficiency and profitability of their portfolio companies.

Deal activity volume and count fell sharply, by 21 percent and 24 percent, respectively, which continued the slower pace set in the second half of 2022. Sponsors largely opted to hold assets longer rather than lock in underwhelming returns. While higher financing costs and valuation mismatches weighed on overall deal activity, certain types of M&A gained share. Add-on deals, for example, accounted for a record 46 percent of total buyout deal volume last year.

Real estate recedes

For real estate, 2023 was a year of transition, characterized by a litany of new and familiar challenges. Pandemic-driven demand issues continued, while elevated financing costs, expanding cap rates, and valuation uncertainty weighed on commercial real estate deal volumes, fundraising, and investment performance.

Managers faced one of the toughest fundraising environments in many years. Global closed-end fundraising declined 34 percent to $125 billion. While fundraising challenges were widespread, they were not ubiquitous across strategies. Dollars continued to shift to large, multi-asset class platforms, with the top five managers accounting for 37 percent of aggregate closed-end real estate fundraising. In April, the largest real estate fund ever raised closed on a record $30 billion.

Capital shifted away from core and core-plus strategies as investors sought liquidity through redemptions in open-end vehicles and reduced gross contributions to the lowest level since 2009. Opportunistic strategies benefited from this shift, as investors turned their attention toward capital appreciation over income generation in a market where alternative sources of yield have grown more attractive.

In the United States, for instance, open-end funds, as represented by the National Council of Real Estate Investment Fiduciaries Fund Index—Open-End Equity (NFI-OE), recorded $13 billion in net outflows in 2023, reversing the trend of positive net inflows throughout the 2010s. The negative flows mainly reflected $9 billion in core outflows, with core-plus funds accounting for the remaining outflows, which reversed a 20-year run of net inflows.

As a result, the NAV in US open-end funds fell roughly 16 percent year over year. Meanwhile, global assets under management in closed-end funds reached a new peak of $1.7 trillion as of June 2023, growing 14 percent between June 2022 and June 2023.

Real estate underperformed historical averages in 2023, as previously high-performing multifamily and industrial sectors joined office in producing negative returns caused by slowing demand growth and cap rate expansion. Closed-end funds generated a pooled net IRR of −3.5 percent in the first nine months of 2023, losing money for the first time since the global financial crisis. The lone bright spot among major sectors was hospitality, which—thanks to a rush of postpandemic travel—returned 10.3 percent in 2023. 2 Based on NCREIFs NPI index. Hotels represent 1 percent of total properties in the index. As a whole, the average pooled lifetime net IRRs for closed-end real estate funds from 2011–20 vintages remained around historical levels (9.8 percent).

Global deal volume declined 47 percent in 2023 to reach a ten-year low of $650 billion, driven by widening bid–ask spreads amid valuation uncertainty and higher costs of financing (Exhibit 3). 3 CBRE, Real Capital Analytics Deal flow in the office sector remained depressed, partly as a result of continued uncertainty in the demand for space in a hybrid working world.

During a turbulent year for private markets, private debt was a relative bright spot, topping private markets asset classes in terms of fundraising growth, AUM growth, and performance.

Fundraising for private debt declined just 13 percent year over year, nearly ten percentage points less than the private markets overall. Despite the decline in fundraising, AUM surged 27 percent to $1.7 trillion. And private debt posted the highest investment returns of any private asset class through the first three quarters of 2023.

Private debt’s risk/return characteristics are well suited to the current environment. With interest rates at their highest in more than a decade, current yields in the asset class have grown more attractive on both an absolute and relative basis, particularly if higher rates sustain and put downward pressure on equity returns (Exhibit 4). The built-in security derived from debt’s privileged position in the capital structure, moreover, appeals to investors that are wary of market volatility and valuation uncertainty.

Direct lending continued to be the largest strategy in 2023, with fundraising for the mostly-senior-debt strategy accounting for almost half of the asset class’s total haul (despite declining from the previous year). Separately, mezzanine debt fundraising hit a new high, thanks to the closings of three of the largest funds ever raised in the strategy.

Over the longer term, growth in private debt has largely been driven by institutional investors rotating out of traditional fixed income in favor of private alternatives. Despite this growth in commitments, LPs remain underweight in this asset class relative to their targets. In fact, the allocation gap has only grown wider in recent years, a sharp contrast to other private asset classes, for which LPs’ current allocations exceed their targets on average. According to data from CEM Benchmarking, the private debt allocation gap now stands at 1.4 percent, which means that, in aggregate, investors must commit hundreds of billions in net new capital to the asset class just to reach current targets.

Private debt was not completely immune to the macroeconomic conditions last year, however. Fundraising declined for the second consecutive year and now sits 23 percent below 2021’s peak. Furthermore, though private lenders took share in 2023 from other capital sources, overall deal volumes also declined for the second year in a row. The drop was largely driven by a less active PE deal environment: private debt is predominantly used to finance PE-backed companies, though managers are increasingly diversifying their origination capabilities to include a broad new range of companies and asset types.

Infrastructure and natural resources take a detour

For infrastructure and natural resources fundraising, 2023 was an exceptionally challenging year. Aggregate capital raised declined 53 percent year over year to $82 billion, the lowest annual total since 2013. The size of the drop is particularly surprising in light of infrastructure’s recent momentum. The asset class had set fundraising records in four of the previous five years, and infrastructure is often considered an attractive investment in uncertain markets.

While there is little doubt that the broader fundraising headwinds discussed elsewhere in this report affected infrastructure and natural resources fundraising last year, dynamics specific to the asset class were at play as well. One issue was supply-side timing: nine of the ten largest infrastructure GPs did not close a flagship fund in 2023. Second was the migration of investor dollars away from core and core-plus investments, which have historically accounted for the bulk of infrastructure fundraising, in a higher rate environment.

The asset class had some notable bright spots last year. Fundraising for higher-returning opportunistic strategies more than doubled the prior year’s total (Exhibit 5). AUM grew 18 percent, reaching a new high of $1.5 trillion. Infrastructure funds returned a net IRR of 3.4 percent in 2023; this was below historical averages but still the second-best return among private asset classes. And as was the case in other asset classes, investors concentrated commitments in larger funds and managers in 2023, including in the largest infrastructure fund ever raised.

The outlook for the asset class, moreover, remains positive. Funds targeting a record amount of capital were in the market at year-end, providing a robust foundation for fundraising in 2024 and 2025. A recent spate of infrastructure GP acquisitions signal multi-asset managers’ long-term conviction in the asset class, despite short-term headwinds. Global megatrends like decarbonization and digitization, as well as revolutions in energy and mobility, have spurred new infrastructure investment opportunities around the world, particularly for value-oriented investors that are willing to take on more risk.

Private markets make measured progress in DEI

Diversity, equity, and inclusion (DEI) has become an important part of the fundraising, talent, and investing landscape for private market participants. Encouragingly, incremental progress has been made in recent years, including more diverse talent being brought to entry-level positions, investing roles, and investment committees. The scope of DEI metrics provided to institutional investors during fundraising has also increased in recent years: more than half of PE firms now provide data across investing teams, portfolio company boards, and portfolio company management (versus investment team data only). 4 “ The state of diversity in global private markets: 2023 ,” McKinsey, August 22, 2023.

In 2023, McKinsey surveyed 66 global private markets firms that collectively employ more than 60,000 people for the second annual State of diversity in global private markets report. 5 “ The state of diversity in global private markets: 2023 ,” McKinsey, August 22, 2023. The research offers insight into the representation of women and ethnic and racial minorities in private investing as of year-end 2022. In this chapter, we discuss where the numbers stand and how firms can bring a more diverse set of perspectives to the table.

The statistics indicate signs of modest advancement. Overall representation of women in private markets increased two percentage points to 35 percent, and ethnic and racial minorities increased one percentage point to 30 percent (Exhibit 6). Entry-level positions have nearly reached gender parity, with female representation at 48 percent. The share of women holding C-suite roles globally increased 3 percentage points, while the share of people from ethnic and racial minorities in investment committees increased 9 percentage points. There is growing evidence that external hiring is gradually helping close the diversity gap, especially at senior levels. For example, 33 percent of external hires at the managing director level were ethnic or racial minorities, higher than their existing representation level (19 percent).

Yet, the scope of the challenge remains substantial. Women and minorities continue to be underrepresented in senior positions and investing roles. They also experience uneven rates of progress due to lower promotion and higher attrition rates, particularly at smaller firms. Firms are also navigating an increasingly polarized workplace today, with additional scrutiny and a growing number of lawsuits against corporate diversity and inclusion programs, particularly in the US, which threatens to impact the industry’s pace of progress.

Fredrik Dahlqvist is a senior partner in McKinsey’s Stockholm office; Alastair Green  is a senior partner in the Washington, DC, office, where Paul Maia and Alexandra Nee  are partners; David Quigley  is a senior partner in the New York office, where Connor Mangan is an associate partner and Aditya Sanghvi  is a senior partner; Rahel Schneider is an associate partner in the Bay Area office; John Spivey is a partner in the Charlotte office; and Brian Vickery  is a partner in the Boston office.

The authors wish to thank Jonathan Christy, Louis Dufau, Vaibhav Gujral, Graham Healy-Day, Laura Johnson, Ryan Luby, Tripp Norton, Alastair Rami, Henri Torbey, and Alex Wolkomir for their contributions

The authors would also like to thank CEM Benchmarking and the StepStone Group for their partnership in this year's report.

This article was edited by Arshiya Khullar, an editor in the Gurugram office.

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Is real estate still a safe investment tips for today's market.

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Due to the quick jump in interest rates, many commercial real estate properties have significant and unexpected headwinds. Hopefully, you don’t own an empty commercial building that you were planning on refinancing soon. Some of the very best multi-family programs had to be written down by 20-30%, and that was on the safer types of multi-family; the riskier multi-family programs fared even worse.

TOPSHOT - People eat lunch on the terrace of a Manhattan office building on June 1, 2022, in New ... [+] York. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)

According to CBRE, there was a global office vacancy rate of 12.9% at the end of March, which was almost the same as the highs in 2009 and 2010 after the global financial crisis. While the vacancy rate is nearly the same, the economic situation is better this time, leading to the assumption that work from home after the pandemic had an impact that may continue into the future.

So, where is it safe to invest? Interest rate risk is still on the table; there are cracks in the economy and last election year we had a pandemic, so anything is possible.. One answer for safe investments may be long-term net lease investment of essential retail companies with top-quality tenants and only their top-performing stores.

Essential real estate

Components of Net-lease Investments:

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Net lease requires the tenant to pay, in addition to rent, some or all of the property expenses that normally would be paid by the property owner or landlord. These include expenses such as property taxes, insurance, maintenance, repair, operations, utilities, and other items. These expenses are often categorized into the three nets: property taxes, insurance, and maintenance. In the US, a lease where all three of these expenses are paid by the tenant is known as a triple net lease.

In other words, a triple net lease is like ordering a combo meal where you serve the tenant the burger but they have to pay extra for the fries, cheese, drink, and maybe even the ketchup packet. Taking many of the costly variables of owning a property off the table makes it a much safer place to invest.

LOS ANGELES, CA - JULY 24: Signs for Taco Bell, Grinder, McDonalds, Panda Express fast-food ... [+] restaurant line the streets in the Figueroa Corridor area of South Los Angeles on July 24, 2008, Los Angeles, California. The Los Angeles City Council committee has unanimously approved year-long moratorium on new fast-food restaurants in a 32-square-mile area, mostly in South Los Angeles, pending approval by the full council and the signature of Mayor Antonio Villaraigosa to make it the law. South LA has the highest concentration of fast-food restaurants of the city, about 400, and only a few grocery stores. L.A. Councilwoman Jan Perry proposed the measure to try to reduce health problems associated with a diet high in fast-food, like obesity and diabetes, which plague many of the half-million people living there. (Photo by David McNew/Getty Images)

Essential Retail

Retail tenant demand has maintained momentum due to several years of industry transformation and larger retailer consolidations in higher-quality locations, despite varying degrees of health from economic indicators. According to Coresight Research, US store openings outpaced store closings by over 1,500 stores in 2022, and just under 1,000 stores so far through 2023. 7 Leasing activity has generally remained positive across North America, Europe, and Asia/Pacific. 8

There are “must haves” and “like to haves” in life. Essential retai l is a “must-have”. Think grocery store, top-tier location for a Pharmacy, blood dialysis, kidney centers, and blood testing locations. Remember all the retail businesses that stayed open during COVID-19? Those are the types we see in essential retail portfolios. Must have retail tends to be safer than like to have retail stores, they are more protected from failing.

Top Quality Tenants

When you own a property and lease it as a net-lease agreement, all the variables are the tenant's problem. Insurance on the tenant. Property taxes on the tenant. Groundskeeping on the tenant. That is all good, but those are also reasons you need a high-quality tenant who can absorb those costs without going bankrupt. When looking at essential retail opportunities, we only look at the top rate tenants and ensure that the home office backs the lease on the property.

SPRINGFIELD, VA - AUGUST 14: The sign of a Target store is displayed August 14, 2003 in ... [+] Springfield, VA. Target Corp. reported a 4 percent increase in second-quarter profits. (Photo by Alex Wong/Getty Images)

Top Performing Stores

Location matters. Putting the legwork to look at the trends in the area has historically been the best way to underwrite a location. Top performing stores are typically in geographically advantageous locations with growing populations, low crime, and demographics that support the type of essential retail we are considering. After that, you want only to lease top performing locations so they have a high chance of remaining open. Even with a master lease still paying the rent, it is hard for a closed store to grow in value over time. While the role of retail locations has evolved , and most consumers enjoy utilizing a hybrid approach that offers them convenience, many have expressed they feel less inclined to order from an online location that doesn’t have a retail store.

How to Invest?

Some people directly own a standalone net-lease property. Owning one property tends to be riskier than we are comfortable with, so we recommend a portfolio of these so you get a tenant, location, and type of retail diversification. We tend to use a DST or a private REIT structure . Both are not exposed to the stock market and have liquidity locked up for 3, 5, and sometimes 8 or more years. Investors need to determine if liquidity is a greater concern than income and growth in a vehicle not exposed to the stock market . Economic issues like inflation, interest rates, and insurance costs are still present in this type of real estate, but the net-lease aspect makes it mostly the tenant's problem. The biggest flaw of net lease is that long-term leases (typically 20 years) have only rent bumps in the lease. So your income won’t have crazy growth since most rent bumps are 2-4%, depending on other terms. However, in this topsy-turvy world we live in, it’s worth considering.

Frederick Hubler is the founder and CEO of Creative Capital Wealth Management Group, a retainer-based wealth strategy firm specializing in alternative strategies located in Chester County, PA.

Securities are offered through Arkadios Capital. Member FINRA/SIPC. Advisory services are offered through Creative Capital Wealth Management Group. Creative Capital Wealth Management Group and Arkadios are not affiliated through any ownership.

This material was created for educational and informational purposes only and is not intended as tax, legal or investment advice.

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