Home bias in Asian REIT portfolio investment strategies

REITs invest prevalently on real estate assets and due the unique features of each investment released asset managers normally prefer to focus their attention prevalently on investment available in the hosting country (Zhou and Sah, 2009). This evidence is clear for the US market where normally an out-of-state buyer pay always a premium for acquiring a real estate asset due to the higher search and transaction costs related to the out-of-state investment (Lambson et al., 2004). There is no evidence worldwide of the existence of the same home bias for not American fund managers. Looking at the sample of REITs included in the S&P REIT global index, the chapter compares the home bias of Asian REITs with those that affect all other countries represented in the index (mainly United States and Europe).Once identified differences in the home bias exposure among these market, the paper focuses the attention only on Asian REITS in order to evaluate if more geographically concentrated achieve and higher or lower performance corrected for the risk exposure with respect to the less concentrated ones. Results obtained demonstrate that among countries the degree of home bias in the REITs industry is different and those that are trades in Asia are not the most geographically concentrated. Empirical analysis on the impact of geographical concentration on the performance points out some interesting differences between home biased and not home biased REITs.