Explaining the macro‐economy and retail real estate sector dynamic interaction between prime and suburban retail real estate sectors

Abstract

Purpose

From the perspective of the macro‐economy and real estate sector interaction, this paper aims to examine the maturing prime retail real estate sector versus the developing suburban retail real estate sector.

Design/methodology/approach

This paper adopts a highly specific dynamic computable general equilibrium model under system dynamics programming to structure the resulting system complexity within the context of Singapore.

Findings

Ex post and ex ante model estimations find that the suburban retail real estate sector is on the whole more susceptible to gross domestic product (GDP) growth policy that affects both GDP expansion and retail rents in actual and expectation terms as well as returns.

Research limitations/implications

The DCGE model ex ante estimations for the planned scenarios, under low or high GDP growth for the prime and suburban retail real estate sectors, enhances understanding of structural factors and dynamic interaction in the maturation phase of the prime retail real estate sector in Singapore.

Practical implications

In comparison, Singapore's suburban retail real estate sector is found to be in a developing phase.

Originality/value

There is limited local research on the underlying relationship between the economy and the retail real estate sector, although Singapore's retail sector and retail real estate sector form an integral part of sustainable economic expansion.

Citation

Hin David Ho, K. and bin Ibrahim Muhammad, F. (2010), "Explaining the macro‐economy and retail real estate sector dynamic interaction between prime and suburban retail real estate sectors", Journal of Property Investment & Finance, Vol. 28 No. 2, pp. 77-108. https://doi.org/10.1108/14635781011024845