Purpose –  To examine whether investors in commercial real estate exhibit some important behavioural biases, namely: anchoring, herding, framing/nudging, loss aversion and over-confidence. If so, are there steps that investors and their agents ( fund managers and advisors) could take (a) to temper the effects of their own biases and (b) to exploit the presence of such biases in other market participants?

Design/methodology/approach –  Analysis of historic data sources at asset and market levels and over different time periods, with focus on identifying the specific biases listed above, singly and in combination

Findings –  Understanding of behavioural bias merits greater attention.

Research limitations/implications –  Reliance on inferences from historic data

Practical implications –  May help develop clearer understanding of market drivers and improved decision-making for market participants.

Originality/value –  New research within the real estate industry that could help investors understand the highly cyclical nature of commercial real estate investment markets

Keywords: behavioural biases –  anchoring –  herding –  framing - loss aversion –  over-confidence

Article Classification: Viewpoint