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The rate of return on real estate: long-run micro-level evidence

Accepted version
Peer-reviewed

Type

Article

Change log

Authors

Chambers, D 
Spaenjers, C 
Steiner, E 

Abstract

Real estate—housing in particular—is a less profitable investment in the long run than previously thought. We hand-collect property-level financial data for the institutional real estate portfolios of four large Oxbridge colleges over the period 1901–1983. Gross income yields initially fluctuate around 5%, but then trend downward (upward) for agricultural and residential (commercial) real estate. Long-term real income growth rates are close to zero for all property types. Our findings imply annualized real total returns, net of costs, ranging from approximately 2.3% for residential to 4.5% for agricultural real estate.

Description

Keywords

38 Economics, 3504 Commercial Services, 3801 Applied Economics, 35 Commerce, Management, Tourism and Services, Women's Health, Generic health relevance

Journal Title

The Review of Financial Studies

Conference Name

Journal ISSN

0893-9454
1465-7368

Volume Title

34

Publisher

Oxford University Press (OUP)

Rights

All rights reserved
Sponsorship
Isaac Newton Trust (1624(o))
We are grateful to the archivists of King’s College and Trinity College, Cambridge, and of Christ Church and New College, Oxford for advice and assistance with data collection, and to the Cambridge Endowment for Research in Finance, the Centre for Endowment Asset Management, the Isaac Newton Trust, St John’s College Cambridge, ANR/Investissements d’Avenir (LabEx Ecodec/ANR-11-LABX-0047), and the Geneva Institute for Wealth Management for financial support.