Invisible ties. The international network of real estate investments and their impact on housing markets

• Applicant: Dr. Jakob Miethe
• Subject Area: Economic Policy, Applied Economics
• Term: since 2023
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 529232873

Real estate has become an international investment asset that is oftentimes funnelled through anonymous tax haven companies. Anecdotal evidence has identified the Jordanian King, religious orders, Russian oligarchs and the president of the United Arab Emirates as the beneficial owners of such investments. But do these qualitative examples hold up to quantitative scrutiny? Who is ultimately behind real estate investments from tax haven companies? How is the international ownership network structured? What are its impacts on host cities, for instance on property prices, rent levels, and vacancies? Does real estate investment through tax havens lead to a construction response that focuses on high-end properties instead of the needs of the local population? The project „Invisible Ties. The International Network of Real Estate Investments and their Impact on Housing Markets” provides answers to these questions. For this purpose, an international team of researchers who are active in the emerging literature on international real estate investments team up to illuminate the international real estate market as a whole and from a cross-country perspective. The project consists of three packages. First, we quantify international real estate investment from tax havens in five home countries for which we have data access: France, Germany, Britain, Norway, and the U.S. We then provide a global estimate of real estate wealth in tax havens based on leaks from tax havens and global interpolations (Package 1, Quantification). Second, we describe the structure of international real estate investment. We create data on the corporate ownership chains behind these investments and describe the resulting international network to explain how it hides (de-)centralization of ownership (Package 2, Structure). Third, we turn to the impact of international real estate investment on the host economies. We provide causal evidence of its impact on real estate prices and rent levels. We also provide causal evidence of the investments’ impacts on vacancy rates and test how construction responds to this foreign capital and in what market segments additional supply is created (Package 3, Impacts). The project will provide policy relevant evidence on the size of the real estate market held through invisible structures, its importance across different host economies, as well as its growth over time. We will also show how international real estate investment interacts with policy goals and housing objectives of the host city. The analyses will be published in academic papers and disseminated through several venues. We will organize a public workshop on international real estate investments as well as seminars in Paris and Munich and disseminate results through the channels of the EU Tax Observatory.

• DFG Programme: Research Grants
• International Connection: France
• Partner Organisation: Agence Nationale de la Recherche / The French National Research Agency
• Cooperation Partner: Professor Dr. Gabriel Zucman