|Institution:||University of New South Wales|
|Keywords:||Investment; REIT; Property; Decision; Capital budgeting|
|Full text PDF:||http://handle.unsw.edu.au/1959.4/52942|
Real Estate Investment Trusts (REITs) are collective investment products listed on the Australian Stock Exchange, with their principal business activity being the acquisition, management and disposal of investment property. REITs may be sector specific and invest only in the office, retail or industrial property sector, or may be diversified and invest in a range of property sectors. Given their principal business activity, making property investment decisions is both a fundamental and an ongoing activity to be undertaken by REITS, but an activity for which relatively little research has been undertaken worldwide. Accordingly, the problem for investigation was framed with both a theoretical basis and a practical application as: ��How should and how do REITs make property investment decisions?�� The primary gap identified from that literature reviewed concerned how should and how do REITs make property investment decisions. A normative model of how property investment decisions should be made, comprising twenty steps in four stages, was proposed for empirical testing through the hypothesis of a general theory of the property investment decision making process: ��That the property investment decision making process comprises twenty linear, sequential steps.�� Secondary gaps were identified from that literature reviewed concerning the validity of the proposed steps and stages and tertiary gaps identified concerning the role of assets and portfolios, risk-return and behavioural influences in property investment decision making. Data for empirical testing of the hypothesis was collected through semi-structured interviews with decision makers in eleven Australian REITs, using an unprompted question followed by prompted questions. That data collected was analysed quantitatively to determine support for the hypothesis and those secondary gaps identified and qualitatively using thematic analysis to contribute to knowledge concerning the tertiary gaps identified in that literature reviewed. The hypothesis and thus the general theory were found to be supported by the findings of empirical testing with the majority of steps in the proposed normative model of how property investment decisions should be made confirmed, with a similar descriptive model of how REITs do make property investment decisions identified. In response to the tertiary gaps identified in that literature reviewed, an asset focus, an emphasis on return rather than risk or diversification and a potentially significant role for behavioural influences were found in the property investment decision making process.