Economic theory predicts economic integration in the European Community (EC) will result in single markets for individual goods, services and factors of production. The specific characteristics of commercial real estate make it unlikely that a single market will result. However, even without a single market, theory predicts that markets for similar real estate (commercial office, industrial and retail) will converge as a result of economic integration. This paper examines several market determinants to see if we can find evidence of the predicted convergence. Looking at data from 1983 to 1994 we find evidence of some convergence but the extent is small and major institutional differences within the countries remain. Implications are that barriers to the efficient flow of investment funds into real estate remain and distinct markets will continue to characterize real estate within the EC.
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Worzala et al. (1996) studied this question.
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