Louis Johner

Getting to know the doctoral candidates of the Geneva School of Economics and Management. Today, GSEM Ph.D. student Louis Johner from the Geneva Finance Research Institute tells us more about his research.

Full name and Nationality?
Louis Johner, Swiss.

Academic Background?
I have completed a Bachelor's degree in Business Administration within the Banking and Finance program (Risk Management specialization) at the Haute Ecole de Gestion in Geneva. I followed this with a Master's degree in Statistics at the GSEM.

Program and Specialization?
I am in my third year of the Ph.D in Finance program. Currently, I am revising my first research paper and I am starting a second research project.

My doctoral research concentrates on the risk and return characteristics of commercial real estate investments and I am writing my thesis under the guidance of Professor Martin Hoesli.

Why did you choose to study for your Ph.D. at the GSEM?
It was a very opportunistic choice. I always had a keen interest in commercial real estate and I dedicated both my Bachelor and Master theses to the problem of estimating the risk of direct real estate investments. I notably worked on a Monte Carlo simulation approach to estimate property valuation uncertainty, which was developed by Prof. Hoesli. My objective was to extent this model for a multi-property portfolio. Therefore, when the opportunity arose to do a Ph.D in this field with Prof. Hoesli, I took it without hesitation.

What is your Ph.D. about, and why did you choose your research topic?
Broadly speaking, my Ph.D focuses on the risk and return characteristics of commercial real estate. A topic for which I have a long-time interest. Indeed, as I undertook my university studies on a part-time basis, I had the chance to work in various positions in the real estate industry, from property management to investment analysis. This permitted me to discover the intricacies of the property market, but also to awaken my curiosity to learn more about it.

Commercial real estate is a unique asset class. By comparison with the traditional assets that are stocks and bonds, the physical nature of properties creates unique challenges in the context of investment management. Real estate assets are immovable, location-specific, non-fungible, illiquid, and have a high unit value. Additionally, properties are traded relatively infrequently on decentralized markets, with low transparency and high transaction costs.

All these specificities combine to make real estate a fascinating research subject.

What is innovative about your research, and what is the most important question you want to address?
I strive to build on my experience in the real estate industry and to bring answers to subjects that have high relevance for practitioners. Initially, I focused my research on a well-known characteristic of properties, namely that they are immovable. As such, real estate portfolios have risk and return patterns dependent on the specific markets where the underlying properties are located. Therefore, I have notably investigated how portfolio performance differs when the assets are located in a gateway or non-gateway markets. This is a topic of significant importance, as institutional investors have shown a preference toward gateway markets, despite a lack of evidence to support this strategy.

Two other important questions that I am trying to answer are: Is the downside risk of commercial real estate measurable on an ex-ante basis? And, if so, what is the most appropriate approach for such measurements? Answers need to be contrasted for various market types (i.e., gateway and non-gateway), regions and property types (i.e., apartment, industrial, office and retail).

What is one thing that you have enjoyed the most during your Ph.D.? What is, or has been, the most challenging part?
What I am enjoying the most is the possibility to freely pursue my research interests with the full support of my advisor and the other faculty members. I truly appreciate the incredible research environment and working conditions at the GSEM.

On the flip side, without any hesitation, the most challenging part is the lack of quality data about commercial real estate. I know that we hear that from all research areas, but it is a barrier to research in our field.

Do you have any advice for someone considering a Ph.D.?
Firstly, I would advise them to find a subject that they are passionate about. Secondly, I would recommend them to look for a thesis advisor who is as passionate as they are about this topic, and with who they can collaborate well. I am very fortunate to be both captivated by my research subject and to be extremely well guided by my thesis advisor. These are helpful in making the path to a Ph.D, a less bumpy road.

Would you like to share any other information with us?
To support our work on gateway markets, Prof. Hoesli and I were fortunate to receive a research grant from the Real Estate Research Institute. Besides the recognition that this grant brings, another benefit is that it helped us secure access to the National Council of Real Estate Investment Fiduciaries (NCREIF) database, which is the largest database for U.S. commercial real estate. This was critical for our research and I am thankful to RERI and NCREIF for this. After presenting this paper at various conferences, we are looking forward to presenting it at the 2021 Annual European Commercial Real Estate Data Alliance (E-CREDA) Conference in December. E-CREDA is a new European initiative to improve the access to and understanding of commercial real estate data.

Tell us something fun about yourself.
I already fought with one of my students!
(Disclaimer: We unexpectedly meet in a combat sport sparring session and it was very friendly.)