LaPier, Terrence Walter
(1996)
Real estate advisory services: Growth and competition in Japan, Europe, and the United States, 1960-1990.
PhD thesis, London School of Economics and Political Science.
Abstract
This thesis examines the international growth and diversification of real estate advisory services in the United States, the United Kingdom, Germany, and Japan from over a 30-year period, 1960-1990. These four countries were selected because they were the most active in cross-border direct investment during this period, and intricate economic interdependencies among them prompted the greatest advancements in innovative real estate advisory services. Economic and cultural differences and similarities among the four focal countries and their respective service professions provide the bases for evaluating the primary hypothesis: the internationalization of real estate advisory services were most efficiently and effectively achieved by firms that first built solid reputations in their home nations, and subsequently expanded into multiregional organizations by responding to the cross-border investment activities of existing and prospective multinational clients. If leading firms in the focal countries expanded in domestic markets to capitalize on the national economy's maturing real estate markets, then moved into foreign markets to capitalize on rising cross-border investment flows over the 1960-1990 period, the primary thesis raises a question about the relative significance of cross-border real estate investment to national economic conditions, generally, and to the growth of commercial real estate markets and sectoral employment in the focal countries, specifically. A secondary hypothesis, therefore, is tested to identify the relative impact of total cross-border real estate investment flows on employment levels in the commercial real estate sector in the U.S., U.K., Germany, and Japan. This thesis also examines the several dimensions of the economy and financial system affected by domestic and foreign investment in commercial real estate assets after 1960. For example, rising worldwide commercial property investment appeared to be an important factor in the escalation of corporate real estate values, in the growth of construction industries and related services sectors, in the changes in the net worth of major financial institutions, and in the asset diversification of insurance and pension fund portfolios. As part of this trend, the growth of international business and the rise in mergers and acquisitions also elevated cross-border direct investment activity in real estate as companies expanded into foreign markets. This thesis explores the process by which property advisory services internationalized and gained an important role in the global service economy by counseling investors on the location and volume of investment activities, and thereby influencing the international flow of real estate investment funds. It also examines whether real estate advisory firms in the focal countries gained competitive advantage over the 30-year period due to the presence of two basic conditions: an international network of property professionals; and a diversified services practice--brokerage, property management, finance, facilities planning and development, and real estate sales and purchases. By reviewing national fluctuations in cross-border direct investment in real estate, and periodic changes and major episodes in the foreign expansion of real estate advisory services in the focal countries, this thesis seeks to examine specific national factors that influenced effective internationalization in domestic property services. Basic principles in economic history provide the theoretical framework concerning competitive and comparative advantages among nations and particular organizations.
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