Recent trends in real estate research: a comparison of recent working papers and publications using machine learning alg
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Recent trends in real estate research: a comparison of recent working papers and publications using machine learning algorithms Wolfgang Breuer1 · Bertram I. Steininger2 Published online: 5 September 2020 © The Author(s) 2020
JEL Classification R30 · C45 · C80
1 The economic relevance of the real estate sector und its recent dynamics In most countries, the real estate sector plays a dominant role—as measured by vol‑ ume, share of the economy, and workforce; but its turnover ratio and therefore its ability to generate profit for traditional banks or transaction and consultancy com‑ panies is lower than it is for the stock or bond market. For example, in the US, the total value of the real estate market amounted to about $46.4 trillion in 2018 (Savills 2017, 2019) which is around half of American households’ overall net wealth of $98.2 trillion in 2018 (Credit Suisse 2018) and about 2.3 times the US GDP of 2018; around 4.5% of the US workforce1 works in the construction sector in 2018 (BLS 2019). Similar figures can be obtained for Germany with a total value of the real estate market of about $8.3 trillion in 2018 (Savills 2017, 2019) which is more than half of the households’ overall net wealth of $14.5 trillion in 2018 (Credit Sui‑ sse 2018) and about 2.1 times Germany’s GDP of 2018; around 6.8% of Germany’s workforce2 works in the construction and real estate sector in 2018 (Statistisches Bundesamt 2019). However, not only the sheer volume and workforce of the real 1 This figure comprises the workforce in the “construction” industry itself without the employees work‑ ing indirectly for the real estate sector in the “financial”, “governmental” or “other services” sector. 2 This figure comprises the workforce in the “construction” and “real estate and residential housing” sector.
* Wolfgang Breuer [email protected]‑aachen.de Bertram I. Steininger [email protected] 1
Department of Finance, RWTH Aachen University, Templergraben 64, 52056 Aachen, Germany
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KTH Royal Institute of Technology, Real Estate Economics and Finance, Teknikringen 10 B, 100 44 Stockholm, Sweden
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estate market contributes to its economic relevance, but also its interconnection via financial instruments like mortgages and asset-backed securities with the cap‑ ital markets, as has been revealed during the subprime crisis from 2007 on. This crisis started in the US real estate sector, but also affected the capital markets and eventually the real economy of many other countries around the world leading to a worldwide recession in 2008/09. The higher utilization of derivatives on financial real estate products used to increase the turnover of the business with real estate and amplified this crisis. Besides this apparently already high general economic importance of the real estate sector, there are several reasons why to expect rather a highly dynamic devel‑ opment in this segment even for the near future. According to personal interviews and surveys with 905 in
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