Staff Reports
Superstar Returns
Number 999
December 2021

JEL classification: G10, G12, N90, R21, R31

Authors: Francisco Amaral, Martin Dohmen, Sebastian Kohl, and Moritz Schularick

We study long-term returns on residential real estate in twenty-seven “superstar” cities in fifteen countries over 150 years. We find that total returns in superstar cities are close to 100 basis points lower per year than in the rest of the country. House prices tend to grow faster in the superstars, but rent returns are substantially greater outside the big agglomerations, resulting in higher long-run total returns. The excess returns outside the superstars can be rationalized as a compensation for risk, especially for higher co-variance with income growth and lower liquidity. Superstar real estate is comparatively safe.

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AUTHOR DISCLOSURE STATEMENT(S)
Francisco Amaral
I have no relevant or material financial interests that relate to the research described in this paper.

Martin Dohmen
I have no relevant or material financial interests that relate to the research described in this paper.

Sebastian Kohl
I have no relevant or material financial interests that relate to the research described in this paper.

Moritz Schularick
I have no relevant or material financial interests that relate to the research described in this paper.
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