Author: Stephen A. Pyhrr, Stephen E. Roulac, and Waldo L. Born

Start Page: 7
End Page: 68
Volume: 18
Issue Number: 1
Year: 1999
Publication: Journal of Real Estate Research

Abstract: This study synthesizes relevant research and commentary on real estate cycles in a micro-decision-making context and discusses their strategic implications for investors and portfolio managers. It begins with an extensive review of the macro-economic, micro-economic and practitioner literature on cycles, with special emphasis given to the emerging topic of global real estate cycles.

The second major section of the study presents the basic theory of cycles, examines the nature and dynamics of real estate cycles, identifies the many different types of interdependent cycles that affect real estate performance and presents strategies for dealing with multiple interrelated cycles. Understanding the complex and dynamic macro-to-micro cycle relationships is believed to be the foundation for understanding real property performance in a specific market, submarket and site-specific location. Successful cycle strategies that achieve above-market returns over the long run are dependent on this understanding, good market timing and a degree of contrarianism.

Eight cycle models are presented in the third major section of the study. Each presents an analytical definition of cycles, seeks to measure cyclical impacts on key investment variables in an ex ante framework and provides insight into some aspect of investment timing or other property/ portfolio decisions. The final major topics addressed are the key strategic and decision implications for investors and portfolio managers, and a proposed cycles research agenda for the future.