Effects of oil shocks on global securitized real estate markets

• The study analyzes the impact of oil shocks on global real estate markets . • Oil drives each market over the long-run; short-run effects are negative. • Supply and demand shocks have heterogeneous impacts on real estate markets. • Demand shocks drive long-run trends; supply shocks have minimal impact. • Short-run effects of demand shocks are positive; supply shocks are negative. This study examines the impact of aggregate oil shocks and disentangled oil shocks on U.S. and seven major securitized real estate markets. Oil is integrated with the markets and leads them over the long-run. The short-run impact of oil shocks on the markets is negative. A disentangled analysis of oil shocks reveals that supply and demand shocks have differential impacts. Over the long-run, supply shocks have little impact, while demand shocks contribute significantly to common trends and lead each market. In the short-run, demand shocks have positive effects on each market, whereas supply shocks have negative but lesser effects.