How Does Local Real Estate Investment Influence Neighborhood PM2.5 Concentrations? A Spatial Econometric Analysis

Real estate investment has been an important driving force in China’s economic growth in recent years, and the relationship between real estate investment and PM2.5 concentrations has been attracting widespread attention. Based on spatial econometric modelling, this paper explores the relationships between real estate investment and PM2.5 concentrations using multi-source panel data from 30 provinces in China between 1987 and 2017. The results demonstrate that compared with static spatial panel modelling, using a dynamic spatial Durbin lag model (DSDLM) more accurately reflects the influences of real estate investment on PM2.5 concentrations in China, and that PM2.5 concentrations show significant superposition effects and spillover effects. Moreover, there is an inverted U-shaped relationship between real estate investment and PM2.5 concentrations in the Eastern and Central Regions of China. At the national level, the impacts of real estate investment on land urbanization and PM2.5 concentrations first increased and then decreased over time. The key implications of this analysis are as follows. (1) it highlights the need for a unified PM2.5 monitoring platform among Chinese regions; (2) the quality of population urbanization rather than land urbanization should be given more attention; and (3) the speed of construction of green cities and building of green transportation systems and green town systems should be increased.

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International Real Estate Review

International Real Estate Review ◽

10.53383/100320 ◽

2021 ◽

Vol 24 (2) ◽

pp. 185-220

Author(s):

Tien Sing ◽

◽

Wang Long ◽

Keyword(s):

Real Estate ◽

Event Study ◽

Spillover Effects ◽

Real Estate Investment ◽

Significant Evidence ◽

Market Index ◽

The Us ◽

Systematic Risks ◽

Information Spillover ◽

Operating Company

Ambrose et al. (2007) find significant evidence of information spillover effects between index real estate investment trusts (REITs) and nonindex REITs in the US markets using the inclusion of REITs into the S&P general market indices in an event study. This study, however, examines the effects of REIT index inclusion events by using non-index real estate operating company (REOC) returns in the US and Singapore. The study finds that REOC returns are more correlated with the general market index returns after REIT index inclusion events, but the spillover effects are smaller for REOCs in Singapore. The spillover effects of the REIT inclusion events are larger on non-index REITs than non-index REOCs in the US. When examining REIT inclusion events in Singapore, we find evidence of increases in betas only in the REIT market, but the changes in REOC betas are insignificant. However, we find that the REIT index inclusions significantly reduce the systematic risks of REOCs that sponsor the index REITs.

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