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Determinants of foreign direct investment in commercial real estate and hotel sectors for selected MENA countries

Salem, M M (2011) Determinants of foreign direct investment in commercial real estate and hotel sectors for selected MENA countries. Doctoral thesis, Liverpool John Moores University.

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Abstract

Developed, maturing, and emerging market countries are making considerable progress in the legal and institutional reforms necessary to allow and facilitate real estate and tourism (specifically hotel) foreign direct investment (FDI). From a political perspective, countries used to view real estate as one of the "crown jewels" of an economy (Lynn, 2007). No longer does this view hold consistently across countries as countries have recently recognised that real estate and hotel FDI is a way to encourage fixed capital investment, create jobs, and to introduce best practices from multinational corporations. The purpose of this research is to identify the main determinants of foreign direct investment (FDI) in the commercial real estate (CRE) as well as hotel sectors, in selected Middle Eastern countries. Utilising existing theories of FDI, a set of determinants (drivers and barriers) were selected to be empirically tested, utilising Dunning's (Ownership-Location- Internalisation-OLI) eclectic paradigm. As Dunning consider FDI for all industries with a special focus on the manufacturing industry, this research enlarges the scope by commercial real estate and hotels specific considerations. This research utilises the Location dimension of Dunning framework as a basis to explain the determinants of FDI in the CRE and hotel sectors. The literature on both real estate and hotel FDI relies heavily on collecting primary data through surveys; recently however, very few studies (including He & Zhu (2010); He, Wang, & Cheng (2009); Anop (2010) and Rodriguez & Bustillo (2008)) have utilised the availability of data in real estate and started constructing econometric models with the aim of testing set hypotheses. This research fills a gap in the literature by utilising secondary data to develop and test different econometric models, using data from various sources.The empirical work of this research therefore consists of two parts: the first is an econometric analysis of FDI in commercial real estate for eight Middle Eastern and North African (MENA) markets namely, Algeria, Egypt, Morocco, Qatar, Saudi Arabia, Turkey, Tunisia and the UAE during 2003-2009; the second part is an econometric analysis of FDI in hotels for the same countries for the same time period. The econometric analysis is carried out using the pooled Tobin model technique, for panel data, which uses both time-series and cross-sectional data. The findings for the econometric analysis of FDI in commercial real estate shows that country specific factors (i. e. economic health, standards of living and levels human development as well as political stability and absence of violence) as well I as real estate sector-specific variables (size of institutional real estate market), are significant variables and consistently support their hypotheses as explanations for commercial real estate related FDI for the selected MENA countries. The second part of the econometric analysis related to determinants of FDI in hotel greenfield projects, reveals that country specific factors (i. e. taxation environment, human development level and real growth of economy and political stability and absence of violence and terrorism) as well as hotel sector-specific variables (i. e. real visitor expenditure and level of investment freedom); are significant and consistently support their hypotheses as explanations for hotel FDI. These indicators are found to provide -a good explanation of location decision-making in both commercial real estate and hotel sectors. 11 Page

Item Type: Thesis (Doctoral)
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HG Finance
G Geography. Anthropology. Recreation > G Geography (General) > G149 Travel. Voyages and travels (General) > G154.9 Travel and state. Tourism
Divisions: Built Environment
Date Deposited: 22 Mar 2017 12:13
Last Modified: 22 Mar 2017 12:13
URI: http://researchonline.ljmu.ac.uk/id/eprint/6015

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