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Using REIT Data to Assess the Geographic Effects of Mega-events: The Case of the 2020 Tokyo Olympics

Ogawa, Ryoh (2017): Using REIT Data to Assess the Geographic Effects of Mega-events: The Case of the 2020 Tokyo Olympics.

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Abstract

This study proposes a new approach based on the capitalization hypothesis to evaluate the geographic effects of a mega-event of interest. The event study method with real estate investment trust (REIT) data allows for an estimation of abnormal returns accruing from serious announcements of hosting a mega-event (e.g. site decision); it also clarifies the relationship between the abnormal return level and the characteristics of a REIT property portfolio, such as location, which allows a prediction to assess the impacts on the value of profitable real estate properties by local areas. I present an empirical example – the 2020 Tokyo Olympic Games – and the results are as follows: (1) abnormal returns from the successful bid announcement for Japan REITs are significantly positive on average, (2) whereas the extent decreases as the distance from Tokyo increases, the properties used for hotels and commercial facilities are relatively susceptible to impacts even in areas far from Tokyo and (3) the prediction shows that the announcement increases the asset amount of income-producing real estate in Tokyo-to by 4.7%, corresponding to JPY 3.3 trillion or only 60% of that throughout Japan.

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