Expectations vs Reality: Property Investor Decision Making for Seismic Risk Mitigation

Property investors are important stakeholders in the built environment. Their investment behaviour in an increasingly complex environment is, however, constantly challenged by social, economic, technological and environmental disruptions. Amongst these disruptions, natural hazards are major threats that influence property investors’ portfolio preference in regions prone to earthquakes. Although traditional economic theories view property investment decision making as rational, there is a greater recognition that investors operate in a world characterised by uncertainty and asymmetric information, questioning the rationality assumption. In New Zealand, local and central governments are implementing regulatory mechanisms to increase resilience of our built environment. However, the response of property investors often deviates from the expectation of the policymakers. This study therefore, attempts to analyse the complexity in property investment decision making in order to understand how actual investors make investment decisions instead of modelling how they should do it. Using an institutional approach, this study sets out to understand the formal and informal interactions that exist amongst various stakeholders in earthquake-prone environments as a way of establishing a legitimate form of reasoning. Thus, providing insights for informing our resilience policies and implementation framework in an increasingly complex and uncertain world