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Exploring sentiment-driven trading behaviour of different types of investors in the London office market

Ke, Q; Sieracki, K; (2019) Exploring sentiment-driven trading behaviour of different types of investors in the London office market. Journal of Property Research , 36 (2) pp. 186-205. 10.1080/09599916.2019.1593220. Green open access

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Abstract

The paper investigates the sentiment-driven trading behaviour of the four types of investors in the London office market, i.e. UK institutional investors, UK private investors, UK listed real estate companies/REITs and overseas investors. In addition, we examine the relationship between investor sentiment and property performance. Related indices are first calculated to examine whether sentiment change of one investor type leads to changes in the sentiments of other types of investors. We find that herding exists in the London office market. UK private investors follow a contrarian strategy to UK institutional investors and UK listed real estate companies/REITs and enter/exit the market at different points of time. UK institutional investors tend to follow the sentiment of UK listed real estate companies/REITs and overseas investors with lags. There is no evidence that overseas investors rely upon the sentiment of UK specialized property investors in their decision-making. We also find the sentiment-driven trading behaviour of different types of investors is influenced differently by market fundamentals. Property market returns such as yield and rental growth rate has significant impact on trading activity of overseas investors, but not on other investors. The stock market return and securitized real estate return has significant impact on the trading activity of UK institutional investor and overseas investor. Market fundamentals have no significant influence on the trading behaviour of UK private investor and listed real estate company/REIT.

Type: Article
Title: Exploring sentiment-driven trading behaviour of different types of investors in the London office market
Open access status: An open access version is available from UCL Discovery
DOI: 10.1080/09599916.2019.1593220
Publisher version: https://doi.org/10.1080/09599916.2019.1593220
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: investor sentiment, different types of investors, trading behaviour, London office market
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > The Bartlett School of Planning
URI: https://discovery.ucl.ac.uk/id/eprint/10069769
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