TY - JOUR
T1 - Which is a better investment choice in the Hong Kong residential property market
T2 - a big or small property?
AU - Qiao, Zhuo
AU - Wong, Wing Keung
N1 - Funding Information:
The authors are grateful to the Editor and two anonymous referees for helpful comments. This research is supported by University of Macau and Hong Kong Baptist University.
PY - 2015/4/3
Y1 - 2015/4/3
N2 - The relationship between property size and property investment yield is an interesting issue in the real estate market. Previous studies usually use the mean–variance criterion to compare the return-risk profiles of the yields of different property sizes in the United States. However, this criterion has a few shortcomings. This article provides the first attempt to use a stochastic dominance approach to analyse this issue. We adopt two powerful stochastic dominance tests to compare the yields of five property size classes in the Hong Kong residential property market. In our study, we analyse two possible investment outcomes: (1) investors could not rent out their properties, and thus they would gain/lose from the appreciation/depreciation of residential property prices; (2) investors could also gain from rental incomes. Our empirical results provide strong evidence to show that the yields of smaller property classes stochastically dominate the yields of bigger property classes, suggesting that buying smaller properties is a better investment choice in the Hong Kong residential property market.
AB - The relationship between property size and property investment yield is an interesting issue in the real estate market. Previous studies usually use the mean–variance criterion to compare the return-risk profiles of the yields of different property sizes in the United States. However, this criterion has a few shortcomings. This article provides the first attempt to use a stochastic dominance approach to analyse this issue. We adopt two powerful stochastic dominance tests to compare the yields of five property size classes in the Hong Kong residential property market. In our study, we analyse two possible investment outcomes: (1) investors could not rent out their properties, and thus they would gain/lose from the appreciation/depreciation of residential property prices; (2) investors could also gain from rental incomes. Our empirical results provide strong evidence to show that the yields of smaller property classes stochastically dominate the yields of bigger property classes, suggesting that buying smaller properties is a better investment choice in the Hong Kong residential property market.
KW - Hong Kong residential property market
KW - mean–variance criterion
KW - property size
KW - stochastic dominance
UR - https://www.ingentaconnect.com/content/routledg/raef/2015/00000047/00000016/art00004
UR - http://www.scopus.com/inward/record.url?scp=84921600728&partnerID=8YFLogxK
U2 - 10.1080/00036846.2014.1000534
DO - 10.1080/00036846.2014.1000534
M3 - Journal article
AN - SCOPUS:84921600728
SN - 0003-6846
VL - 47
SP - 1670
EP - 1685
JO - Applied Economics
JF - Applied Economics
IS - 16
ER -