Liquidity and the drivers of search, due diligence and transaction times for UK commercial real estate investments

Devaney, S. ORCID: https://orcid.org/0000-0002-1916-2558 and Scofield, D. (2015) Liquidity and the drivers of search, due diligence and transaction times for UK commercial real estate investments. Journal of Property Research, 32 (4). pp. 362-383. ISSN 1466-4453 doi: 10.1080/09599916.2015.1089924

Abstract/Summary

Trading commercial real estate involves a process of exchange that is costly and which occurs over an extended and uncertain period of time. This has consequences for the performance and risk of real estate investments. Most research on transaction times has occurred for residential rather than commercial real estate. We study the time taken to transact commercial real estate assets in the UK using a sample of 578 transactions over the period 2004 to 2013. We measure average time to transact from a buyer and seller perspective, distinguishing the search and due diligence phases of the process, and we conduct econometric analysis to explain variation in due diligence times between assets. The median time for purchase of real estate from introduction to completion was 104 days and the median time for sale from marketing to completion was 135 days. There is considerable variation around these times and results suggest that some of this variation is related to market state, type and quality of asset, and type of participants involved in the transaction. Our findings shed light on the drivers of liquidity at an individual asset level and can inform models that quantify the impact of uncertain time on market on real estate investment risk.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/43823
Item Type	Article
Refereed	Yes
Divisions	Henley Business School > Real Estate and Planning
Publisher	Routledge
Publisher Statement	This is an Accepted Manuscript of an article published by Taylor & Francis in Journal of Property Research on 25/09/2015, available online: http://www.tandfonline.com/10.1080/09599916.2015.1089924
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