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An Investigation of Herding Behaviour in Offshore and Domestic REITs in South Africa

Author/s: Tosin B. Fateye, Peterson Owusu Junior, Omokolade Akinsomi, Viktorija Cohen

Date Published: 29/10/2026

Published in: Volume 31 - 2026 Issue 2 (pages 99 - 121)

DOI: https://doi.org/10.64361/14445921.2026.212334

Abstract

This study investigates behavioural contagion in the South African Real Estate Investment Trust (REIT) market by examining herding dynamics between internationally diversified (offshored) and domestically focused (localised) REITs. Despite the increasing internationalisation of South African REITs, limited evidence exists on whether investors in local REITs imitate the trading behaviour of offshore-focused REITs, particularly during periods of market stress and directional market movements. Addressing this gap, the study assesses herding behaviour across REIT segments under normal, extreme, and asymmetric market conditions and evaluates its implications for market efficiency and portfolio diversification. The analysis employs the Cross-Sectional Standard Deviation (CSSD) and Cross-Sectional Absolute Deviation (CSAD) approaches, enhanced with extreme market quantile thresholds (5th and 95th percentiles) and directional market return specifications to capture nonlinear and time-varying herding effects. Equally weighted portfolios comprising 11 offshored REITs and 9 localised REITs were constructed using daily market data covering the period from 3 October 2017 to 27 March 2024.

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Keywords

Behavior Contagion - Herding Beahaviour - Portfolio Diversification - Reit Market - South Africa.

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