Counteracting Path Dependencies: ‘Rational’ Investment Decisions in the Globalising Commercial Property Market

Abstract

The commercial property market is transforming from a locally embedded industry to an international one. In the neverending search for opportunities, an increasing number of investors are turning their attention to new, distant, and opaque property markets. Still largely unknown to the investors, such markets generate much uncertainty for decision making. Investors seek to overcome this by adopting new decision-making strategies based on economic models promising transparent optimum solutions. Using global office investors as an example, we show that these actors attempt to generate know-how systematically, to take better ‘rational’ decisions rooted in neoclassical economy and based on key performance indicators. However, we also highlight that the process of rational decision making contains some cracks in its edifice, thus providing space for path dependencies to intrude.

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