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Corporate Real Estate in the Singapore Stock Market

Author/s: Liow Kim Hiang

Date Published: 1/01/2001

Published in: Volume 7 - 2001 Issue 4 (pages 271 - 284)

Abstract

This paper investigates the relationship between corporate real estate asset holdings and the value of non-real estate firms. Our specific hypothesis is that the proportion of real estate holdings does affect positively rates of common stock returns due to the capital growth opportunities presented by real estate. Our findings using a yearly cross-sectional test during 1995–99 provide some support to the hypothesis. This helps explain why some non-real estate firms own properties—to increase shareholder value. However, it remains unclear as to whether the real estate impact is highly significant. This is because the influence of other real estate related factors such as debt ratio and firm size has to be jointly considered in stock market valuation. Finally, the implications of the results are highlighted.

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Keywords

Capital Asset Pricing Model - Corporate Real Estate - Firm Valuation - Property Asset Intensity - Singapore

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