Pub Date : 2022-07-06DOI: 10.1108/jerer-03-2021-0019
Olayiwola Oladiran, Adesola Sunmoni, Saheed Ajayi, Jiarong Guo, Muhammad Azeem Abbas
Purpose
This paper examines the categories of property attributes that are important to UK university students in their online accommodation search. It also analyses the volume of information displayed regarding the property attributes and explores the influence of some of the information provided on the attractiveness and by extension, the booking potential of the property.
Design/methodology/approach
The authors use data from an online student accommodation listing platform – student.com – which contain tangible and non-tangible property attributes, and the data are analysed using a hedonic regression model.
Findings
The results show that purpose-built student accommodation's (PBSA) tangible and intangible attributes are important to students in their online accommodation search, although, these attributes vary in impact. The study also reveals that failure to display key information of a PBSA may reduce the attractiveness of the property.
Originality/value
The empirical evidence on student accommodation ex ante preferences and choices is limited, particularly as it relates to online accommodation search in a UK context. The authors' approach to identify the application of the search theory to the student accommodation search process is particularly unique.
{"title":"What property attributes are important to UK university students in their online accommodation search?","authors":"Olayiwola Oladiran, Adesola Sunmoni, Saheed Ajayi, Jiarong Guo, Muhammad Azeem Abbas","doi":"10.1108/jerer-03-2021-0019","DOIUrl":"https://doi.org/10.1108/jerer-03-2021-0019","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This paper examines the categories of property attributes that are important to UK university students in their online accommodation search. It also analyses the volume of information displayed regarding the property attributes and explores the influence of some of the information provided on the attractiveness and by extension, the booking potential of the property.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>The authors use data from an online student accommodation listing platform – student.com – which contain tangible and non-tangible property attributes, and the data are analysed using a hedonic regression model.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The results show that purpose-built student accommodation's (PBSA) tangible and intangible attributes are important to students in their online accommodation search, although, these attributes vary in impact. The study also reveals that failure to display key information of a PBSA may reduce the attractiveness of the property.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>The empirical evidence on student accommodation <em>ex ante</em> preferences and choices is limited, particularly as it relates to online accommodation search in a UK context. The authors' approach to identify the application of the search theory to the student accommodation search process is particularly unique.</p><!--/ Abstract__block -->","PeriodicalId":44570,"journal":{"name":"Journal of European Real Estate Research","volume":"65 2","pages":""},"PeriodicalIF":1.3,"publicationDate":"2022-07-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138513692","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-07-05DOI: 10.1108/jerer-02-2022-0005
A. M. Cunha, Júlio Lobão
PurposeThis paper studies the dynamics and elasticities of house prices in Spain and Portugal (Iberia) at the Metropolitan Statistical Area (MSA) level, addressing panel regression problems such as heterogeneity and cross-sectional dependence between MSA.Design/methodology/approachThe authors develop a two steps study. First, five distinct estimation methodologies are applied to estimate the long-term house price equilibrium of the Iberian MSA house market: Mean Group (MG), Fully Modified Ordinary Least Square (FMOLS) MG (FMOLS-MG), FMOLS Augmented MG (FMOLS-AMG), Common Correlated Effects MG (CCEMG) and Dynamic CCEMG (DCCEMG). FMOLS-AMG is found to be the best estimator for the long-term model. Second, an additional five distinct estimation methodologies are applied to estimate the short-term house price dynamics using the long-term FMOLS-AMG estimated price in the error-correction term of the short-term dynamic house price model: OLS Fixed Effects (FE), OLS Random Effects (RE), MG, CCEMG and DCCEMG. DCCEMG is found to be the best estimator for the short-term model.FindingsThe results show that in the long run Iberian house prices are inelastic to aggregate income (0.227). This is a much lower elasticity than what was previously found in US MSA house price studies, suggesting that there are other factors explaining Iberian house prices. According to our study, coastal MSA presents an inelastic housing supply and a price to income elasticity close to one, whereas inland MSA are shown to have an elastic supply and a non-significant price to income elasticity. Spatial differences are important and cross-section dependence is prevalent, affecting estimates in conventional methodologies that do not account for these limitations, such as OLS-FE and OLS-RE. Momentum and mean reversion are the main determinants of short-term dynamics.Practical implicationsRecent econometric advances that account for slope heterogeneity and cross-section dependence produce more accurate estimates than conventional panel estimation methodologies. The results suggest that house markets should be analyzed at the metropolitan level, not at the national level and that there are significant differences between short-term and long-term house price determinants.Originality/valueTo the best of the authors' knowledge, this is the first study applying recent econometric advances to the Iberian MSA house market.
{"title":"House price dynamics in Iberian Metropolitan Statistical Areas: slope heterogeneity, cross-sectional dependence and elasticities","authors":"A. M. Cunha, Júlio Lobão","doi":"10.1108/jerer-02-2022-0005","DOIUrl":"https://doi.org/10.1108/jerer-02-2022-0005","url":null,"abstract":"PurposeThis paper studies the dynamics and elasticities of house prices in Spain and Portugal (Iberia) at the Metropolitan Statistical Area (MSA) level, addressing panel regression problems such as heterogeneity and cross-sectional dependence between MSA.Design/methodology/approachThe authors develop a two steps study. First, five distinct estimation methodologies are applied to estimate the long-term house price equilibrium of the Iberian MSA house market: Mean Group (MG), Fully Modified Ordinary Least Square (FMOLS) MG (FMOLS-MG), FMOLS Augmented MG (FMOLS-AMG), Common Correlated Effects MG (CCEMG) and Dynamic CCEMG (DCCEMG). FMOLS-AMG is found to be the best estimator for the long-term model. Second, an additional five distinct estimation methodologies are applied to estimate the short-term house price dynamics using the long-term FMOLS-AMG estimated price in the error-correction term of the short-term dynamic house price model: OLS Fixed Effects (FE), OLS Random Effects (RE), MG, CCEMG and DCCEMG. DCCEMG is found to be the best estimator for the short-term model.FindingsThe results show that in the long run Iberian house prices are inelastic to aggregate income (0.227). This is a much lower elasticity than what was previously found in US MSA house price studies, suggesting that there are other factors explaining Iberian house prices. According to our study, coastal MSA presents an inelastic housing supply and a price to income elasticity close to one, whereas inland MSA are shown to have an elastic supply and a non-significant price to income elasticity. Spatial differences are important and cross-section dependence is prevalent, affecting estimates in conventional methodologies that do not account for these limitations, such as OLS-FE and OLS-RE. Momentum and mean reversion are the main determinants of short-term dynamics.Practical implicationsRecent econometric advances that account for slope heterogeneity and cross-section dependence produce more accurate estimates than conventional panel estimation methodologies. The results suggest that house markets should be analyzed at the metropolitan level, not at the national level and that there are significant differences between short-term and long-term house price determinants.Originality/valueTo the best of the authors' knowledge, this is the first study applying recent econometric advances to the Iberian MSA house market.","PeriodicalId":44570,"journal":{"name":"Journal of European Real Estate Research","volume":"19 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2022-07-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85243165","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-06-28DOI: 10.1108/jerer-08-2022-068
P. Taltavull
A conceptual paper covers an exciting view of how the mortgage market would react when a new player with different credit criteria (LTV and interest rates) enters;it advances a theoretical explanation to recover mortgage coverage in those property markets most affected by the GFC. By analysing four measures of market linkages (correlation, spillover, connectedness and causality), this paper demonstrates that portfolio diversification with corporate equity and public real estate increases in the long term and permits future market risk prediction. [...]Hoesli and Malle analyse the effects of the COVID-19 pandemic on commercial real estate prices.
{"title":"Editorial: The aftermath of two consecutive crises: Volatility and property market mechanisms","authors":"P. Taltavull","doi":"10.1108/jerer-08-2022-068","DOIUrl":"https://doi.org/10.1108/jerer-08-2022-068","url":null,"abstract":"A conceptual paper covers an exciting view of how the mortgage market would react when a new player with different credit criteria (LTV and interest rates) enters;it advances a theoretical explanation to recover mortgage coverage in those property markets most affected by the GFC. By analysing four measures of market linkages (correlation, spillover, connectedness and causality), this paper demonstrates that portfolio diversification with corporate equity and public real estate increases in the long term and permits future market risk prediction. [...]Hoesli and Malle analyse the effects of the COVID-19 pandemic on commercial real estate prices.","PeriodicalId":44570,"journal":{"name":"Journal of European Real Estate Research","volume":"80 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2022-06-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74109856","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-06-28DOI: 10.1108/jerer-01-2022-0001
Martin Ahlenius, B. Berggren, Tommy Gerdemark, Jon Kågström, Lars-Johan Åge
PurposeThe purpose of this article is to describe and analyze the occupational life cycle of Swedish real estate brokers.Design/methodology/approachVoluntary turnover among real estate brokers could lead to occupational turnover and/or employee turnover and has been described as problematic by both practitioners and researchers alike. Most previous studies focusing on this issue have explored connections between real estate brokers' personality, economic and market conditions and turnover. Employee turnover involves shifting jobs within the profession (real estate brokerage), whereas occupational turnover concerns movement to a job not related to the real estate brokerage profession. Both perspectives on turnover are however lacking data about the average time spent as a broker. This study fills this gap by exploring real estate brokers' life cycle through data analysis using a cohort study consisting of a sample of 5,304 real estate brokers registered and/or deregistered over a ten-year period from 2010 to 2019.FindingsThe analysis show that the decline is almost linear, resulting in 50% of the newly registered real estate brokers remain in the occupation eight years after registration. These findings are not in line with previous assumptions as the real estate brokers' life cycle is substantially longer. The results also reveal that there are differences in life cycles due to gender and year of registration.Originality/valueThe analysis of longitudinal, aggregated data on the life cycle of real estate brokers is highly relevant as it serves as a point of reference for future longitudinal studies analyzing the motives for leaving the occupation.
{"title":"The occupational life cycle of real estate brokers: a cohort study","authors":"Martin Ahlenius, B. Berggren, Tommy Gerdemark, Jon Kågström, Lars-Johan Åge","doi":"10.1108/jerer-01-2022-0001","DOIUrl":"https://doi.org/10.1108/jerer-01-2022-0001","url":null,"abstract":"PurposeThe purpose of this article is to describe and analyze the occupational life cycle of Swedish real estate brokers.Design/methodology/approachVoluntary turnover among real estate brokers could lead to occupational turnover and/or employee turnover and has been described as problematic by both practitioners and researchers alike. Most previous studies focusing on this issue have explored connections between real estate brokers' personality, economic and market conditions and turnover. Employee turnover involves shifting jobs within the profession (real estate brokerage), whereas occupational turnover concerns movement to a job not related to the real estate brokerage profession. Both perspectives on turnover are however lacking data about the average time spent as a broker. This study fills this gap by exploring real estate brokers' life cycle through data analysis using a cohort study consisting of a sample of 5,304 real estate brokers registered and/or deregistered over a ten-year period from 2010 to 2019.FindingsThe analysis show that the decline is almost linear, resulting in 50% of the newly registered real estate brokers remain in the occupation eight years after registration. These findings are not in line with previous assumptions as the real estate brokers' life cycle is substantially longer. The results also reveal that there are differences in life cycles due to gender and year of registration.Originality/valueThe analysis of longitudinal, aggregated data on the life cycle of real estate brokers is highly relevant as it serves as a point of reference for future longitudinal studies analyzing the motives for leaving the occupation.","PeriodicalId":44570,"journal":{"name":"Journal of European Real Estate Research","volume":"18 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2022-06-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89680123","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-06-06DOI: 10.1108/jerer-09-2021-0048
Peter Karpestam, Peter Palm
PurposeThe authors investigate how prices of condominiums are affected by the size of the tenant-owner associations that they belong to.Design/methodology/approachThe authors use data of sold apartments in the Swedish municipality Malmö 2013–2018 and estimate hedonic price regressions. The authors also perform semi-structured interviews with three senior professionals in real estate companies.FindingsThe authors find significantly negative relationships between the prices of condominiums and the size of tenant-owner associations. Also, regression results indicate that associations should be no smaller than 6–10 apartments. The interviews support that associations should not be too small or too big. The lower and upper limit was suggested by the respondents to 40–50 and 80–150 apartments, respectively. In these ranges, economies of scale can be achieved, and residents will not lose the sense of community and responsibility.Research limitations/implicationsThe authors do not prove causality. Smaller associations may have relatively exclusive common amenities, about which we lack data. The same relationships may not exist in different market conditions.Originality/valueThe authors are not aware of previous studies with the same research question. The size of tenant-owner associations may affect the price through different channels. First, several of the banks in Sweden do not always grant mortgages for condominiums that belong to small associations. Second, larger associations may have better economies of scale and more efficient property management. Third, homeowners may prefer smaller tenant-owned associations, because they may feel less anonymous and provide more influence on common amenities.
{"title":"Does size matter? Is there an optimal size for tenant–owner associations?","authors":"Peter Karpestam, Peter Palm","doi":"10.1108/jerer-09-2021-0048","DOIUrl":"https://doi.org/10.1108/jerer-09-2021-0048","url":null,"abstract":"PurposeThe authors investigate how prices of condominiums are affected by the size of the tenant-owner associations that they belong to.Design/methodology/approachThe authors use data of sold apartments in the Swedish municipality Malmö 2013–2018 and estimate hedonic price regressions. The authors also perform semi-structured interviews with three senior professionals in real estate companies.FindingsThe authors find significantly negative relationships between the prices of condominiums and the size of tenant-owner associations. Also, regression results indicate that associations should be no smaller than 6–10 apartments. The interviews support that associations should not be too small or too big. The lower and upper limit was suggested by the respondents to 40–50 and 80–150 apartments, respectively. In these ranges, economies of scale can be achieved, and residents will not lose the sense of community and responsibility.Research limitations/implicationsThe authors do not prove causality. Smaller associations may have relatively exclusive common amenities, about which we lack data. The same relationships may not exist in different market conditions.Originality/valueThe authors are not aware of previous studies with the same research question. The size of tenant-owner associations may affect the price through different channels. First, several of the banks in Sweden do not always grant mortgages for condominiums that belong to small associations. Second, larger associations may have better economies of scale and more efficient property management. Third, homeowners may prefer smaller tenant-owned associations, because they may feel less anonymous and provide more influence on common amenities.","PeriodicalId":44570,"journal":{"name":"Journal of European Real Estate Research","volume":"60 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2022-06-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73740426","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-05-10DOI: 10.1108/jerer-04-2021-0022
S. Tsolacos, Nicole Lux
PurposeThis paper offers empirical evidence on factors influencing credit spreads on commercial mortgage loans. It extends existing work on the pricing of commercial mortgage loans. The authors examine the relative significance of a range of factors on loan pricing that are lender, asset and loan specific. The research explores and quantifies the sources of spread differentials among commercial mortgage loans. The paper contributes to a limited literature on the subject and serves the purpose of price discovery in commercial property lending. It offers a framework to compare actual pricing with fundamental-based estimates of loan spreads.Design/methodology/approachPanel analysis is deployed to examine the cross-section and time-series determinants of commercial mortgage loan margins and credit spreads. Using an exclusive database of loan portfolios in the United Kingdom (UK), the panel analysis enables the authors to analyse and quantify the impact of a number of theory-consistent and plausible factors determining the cost of lending to commercial real estate (CRE), including type and origin of lender, loan size, loan to value (LTV) and characteristics of asset financed – type, location and grade.FindingsSpreads on commercial mortgages and, therefore, loan pricing differ by the type of lender – bank, insurance company and debt fund. The property sector is another significant risk factor lenders price in. The LTV ratio has increased in importance since 2012. Prior to global financial crisis (GFC), lenders made little distinction in pricing different LTVs. Loans secured in secondary assets command a higher premium of 50–60bps. The analysis establishes an average premium of 35bps for loans advanced in regions compared to London. London is particularly seen a less risky region for loan advancements in the post-GFC era.Research limitations/implicationsThe study considers the role of lender characteristics and the changing regulation in the pricing of commercial mortgage loans and provides a framework to study spreads or pricing in this market that can include additional fundamental influences, such as terms of individual loans. The ultimate aim of such research is to assess whether mortgage loans are correctly priced and spotting risks emanating from actual loan spreads being lower than fundamental-based spreads pointing to tight pricing and over-lending.Practical implicationsThe analysis provides evidence on lender criteria that determine the cost of loans. The study confirms that differences in regulation affect loan pricing. The regulatory impact is most visible in the increased significance of LTV. In that sense, regulation has been effective in restricting lending at high LTV levels.Originality/valueThe paper exploits a database of a commercial mortgage loan portfolio to make loan pricing more transparent to the different types of lender and borrowers. Lenders can use the estimates to assess whether commercial loans are fairly priced. Borrowers b
{"title":"Modelling credit spreads on commercial mortgage loans","authors":"S. Tsolacos, Nicole Lux","doi":"10.1108/jerer-04-2021-0022","DOIUrl":"https://doi.org/10.1108/jerer-04-2021-0022","url":null,"abstract":"PurposeThis paper offers empirical evidence on factors influencing credit spreads on commercial mortgage loans. It extends existing work on the pricing of commercial mortgage loans. The authors examine the relative significance of a range of factors on loan pricing that are lender, asset and loan specific. The research explores and quantifies the sources of spread differentials among commercial mortgage loans. The paper contributes to a limited literature on the subject and serves the purpose of price discovery in commercial property lending. It offers a framework to compare actual pricing with fundamental-based estimates of loan spreads.Design/methodology/approachPanel analysis is deployed to examine the cross-section and time-series determinants of commercial mortgage loan margins and credit spreads. Using an exclusive database of loan portfolios in the United Kingdom (UK), the panel analysis enables the authors to analyse and quantify the impact of a number of theory-consistent and plausible factors determining the cost of lending to commercial real estate (CRE), including type and origin of lender, loan size, loan to value (LTV) and characteristics of asset financed – type, location and grade.FindingsSpreads on commercial mortgages and, therefore, loan pricing differ by the type of lender – bank, insurance company and debt fund. The property sector is another significant risk factor lenders price in. The LTV ratio has increased in importance since 2012. Prior to global financial crisis (GFC), lenders made little distinction in pricing different LTVs. Loans secured in secondary assets command a higher premium of 50–60bps. The analysis establishes an average premium of 35bps for loans advanced in regions compared to London. London is particularly seen a less risky region for loan advancements in the post-GFC era.Research limitations/implicationsThe study considers the role of lender characteristics and the changing regulation in the pricing of commercial mortgage loans and provides a framework to study spreads or pricing in this market that can include additional fundamental influences, such as terms of individual loans. The ultimate aim of such research is to assess whether mortgage loans are correctly priced and spotting risks emanating from actual loan spreads being lower than fundamental-based spreads pointing to tight pricing and over-lending.Practical implicationsThe analysis provides evidence on lender criteria that determine the cost of loans. The study confirms that differences in regulation affect loan pricing. The regulatory impact is most visible in the increased significance of LTV. In that sense, regulation has been effective in restricting lending at high LTV levels.Originality/valueThe paper exploits a database of a commercial mortgage loan portfolio to make loan pricing more transparent to the different types of lender and borrowers. Lenders can use the estimates to assess whether commercial loans are fairly priced. Borrowers b","PeriodicalId":44570,"journal":{"name":"Journal of European Real Estate Research","volume":"54 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2022-05-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88419691","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-05DOI: 10.1108/jerer-05-2022-067
David McIlhatton, J. Berry, David Chapman
resilience in the management of the built environment. From a complementary perspective, this special issue contributes to the knowledge to support better regulations for improving property wealth in cities based on better security and less crime.
{"title":"Guest editorial: urban conflict and real estate","authors":"David McIlhatton, J. Berry, David Chapman","doi":"10.1108/jerer-05-2022-067","DOIUrl":"https://doi.org/10.1108/jerer-05-2022-067","url":null,"abstract":"resilience in the management of the built environment. From a complementary perspective, this special issue contributes to the knowledge to support better regulations for improving property wealth in cities based on better security and less crime.","PeriodicalId":44570,"journal":{"name":"Journal of European Real Estate Research","volume":"5 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2022-04-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87380896","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-03-22DOI: 10.1108/jerer-07-2021-0037
N. Kishor
PurposeThis study aims to know to what extent do the commercial and residential estate markets move together in different economies? Do the shocks originating in one of these markets spillover to the other markets?Design/methodology/approachThe authors apply a modified version of the dynamic factor model to commercial and residential real estate prices in the Euro area, Hong Kong, Singapore and the USA. This modified dynamic factor model decomposes price growth in these two real estate markets into common, spillover and idiosyncratic components.FindingsThe results show significant heterogeneity in the relative importance of different components in the evolution of commercial and residential price growth across different economies. The findings suggest that the spillover from the residential to commercial real estate market dominates the spillover from the commercial to real estate market for all the economies in our sample. The authors also find that the common component accounts for a large fraction of the price movements in the residential markets in the European Union (EU) area and the USA, whereas spillover and common components together explain more than two-thirds of the variations in Hong Kong and Singapore. The results suggest that the role of spillover from one market to another increased significantly during the financial crisis of 2008–2009.Originality/valueThis paper contributes to the existing literature on how the transmission of shocks takes place across commercial and residential real estate markets. The transmission of shocks can take place in two directions in the proposed framework. There may be a direct spillover from a shock from one market to another. This corresponds to a shock to the idiosyncratic component affecting the other idiosyncratic component. In this paper, the authors are mainly interested in indirect spillover where the shock would transmit from the idiosyncratic factor to the common factor, and then from the common factor to the other idiosyncratic factor.
{"title":"Comovements and spillovers in international commercial and residential real estate markets","authors":"N. Kishor","doi":"10.1108/jerer-07-2021-0037","DOIUrl":"https://doi.org/10.1108/jerer-07-2021-0037","url":null,"abstract":"PurposeThis study aims to know to what extent do the commercial and residential estate markets move together in different economies? Do the shocks originating in one of these markets spillover to the other markets?Design/methodology/approachThe authors apply a modified version of the dynamic factor model to commercial and residential real estate prices in the Euro area, Hong Kong, Singapore and the USA. This modified dynamic factor model decomposes price growth in these two real estate markets into common, spillover and idiosyncratic components.FindingsThe results show significant heterogeneity in the relative importance of different components in the evolution of commercial and residential price growth across different economies. The findings suggest that the spillover from the residential to commercial real estate market dominates the spillover from the commercial to real estate market for all the economies in our sample. The authors also find that the common component accounts for a large fraction of the price movements in the residential markets in the European Union (EU) area and the USA, whereas spillover and common components together explain more than two-thirds of the variations in Hong Kong and Singapore. The results suggest that the role of spillover from one market to another increased significantly during the financial crisis of 2008–2009.Originality/valueThis paper contributes to the existing literature on how the transmission of shocks takes place across commercial and residential real estate markets. The transmission of shocks can take place in two directions in the proposed framework. There may be a direct spillover from a shock from one market to another. This corresponds to a shock to the idiosyncratic component affecting the other idiosyncratic component. In this paper, the authors are mainly interested in indirect spillover where the shock would transmit from the idiosyncratic factor to the common factor, and then from the common factor to the other idiosyncratic factor.","PeriodicalId":44570,"journal":{"name":"Journal of European Real Estate Research","volume":"101 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2022-03-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77355183","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-03-21DOI: 10.1108/jerer-07-2021-0039
Marte Flått, J. Olaussen, A. Oust, Ole Jakob Sønstebø
PurposeThis paper aims to investigate the likelihood and price effects of auction hijacking – transactions conducted before a planned auction – in the residential real estate market.Design/methodology/approachUsing a sample of 84,203 residential properties in Oslo, Norway for the period 2007–2017, the authors employ a probit sales choice model to study the likelihood of auction hijacking and hedonic models, fixed effects models and propensity score matching to investigate the price effects.FindingsThe authors find that auction hijacking is more likely to occur in periods of higher market activity and that hijacked auction properties sell at a premium of approximately 4% compared with properties sold at regularly conducted auctions. One possible explanation for the premium could be that risk aversion among buyers leads to a higher likelihood of hijacking offers and higher prices due to the risk reduction premium that sellers can extract.Originality/valueFor most households, buying a home is an investment of great economic significance, and understanding the different aspects of the auction is paramount for both buyers and sellers. Policymakers need to be aware of the market effects from auction hijacking and determine whether restrictions should be introduced.
{"title":"Hijacking the auction – seller's or buyer's curse?","authors":"Marte Flått, J. Olaussen, A. Oust, Ole Jakob Sønstebø","doi":"10.1108/jerer-07-2021-0039","DOIUrl":"https://doi.org/10.1108/jerer-07-2021-0039","url":null,"abstract":"PurposeThis paper aims to investigate the likelihood and price effects of auction hijacking – transactions conducted before a planned auction – in the residential real estate market.Design/methodology/approachUsing a sample of 84,203 residential properties in Oslo, Norway for the period 2007–2017, the authors employ a probit sales choice model to study the likelihood of auction hijacking and hedonic models, fixed effects models and propensity score matching to investigate the price effects.FindingsThe authors find that auction hijacking is more likely to occur in periods of higher market activity and that hijacked auction properties sell at a premium of approximately 4% compared with properties sold at regularly conducted auctions. One possible explanation for the premium could be that risk aversion among buyers leads to a higher likelihood of hijacking offers and higher prices due to the risk reduction premium that sellers can extract.Originality/valueFor most households, buying a home is an investment of great economic significance, and understanding the different aspects of the auction is paramount for both buyers and sellers. Policymakers need to be aware of the market effects from auction hijacking and determine whether restrictions should be introduced.","PeriodicalId":44570,"journal":{"name":"Journal of European Real Estate Research","volume":"6 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2022-03-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82482471","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-03-15DOI: 10.1108/jerer-04-2021-0021
Katarzyna Reyman, G. Maier
PurposeThe purpose of the article is to improve the understanding of the role of institutional factors in real estate development. The authors take into account zoning (existence and type), type of right of disposal and type of buyer and seller of property in a multivariate econometric estimation. Dependent variable of the analysis is the time between acquisition of empty land and the application for a building permit, a period when many important development decisions have to be made. This indicator is closely related to debated phenomena like land hording and speculation.Design/methodology/approachThe authors estimate a Cox proportional hazard model with the time between acquisition and application for a building permit as dependent variable and institutional indicators and a number of control variables as explanatory variables. Study area is the GZM Metropolis in the South of Poland. This region shows enough variability in institutional arrangements to allow for this type of analysis.FindingsThe analysis shows that institutional factors significantly influence the real estate development process. In areas that have not issued a zoning plan, the period until the building permit application is significantly longer. When the state is involved in a transaction (as purchaser or seller), it also takes longer until the building permit application is submitted. Although the instrument is usually intended to speed up development, perpetual usufruct implies a longer period until building permit application. Because of the results the authors get for control variables and for robustness checks, the authors are confident of the results of the analysis.Originality/valueTo the authors’ knowledge, this is the first study that deals with the question how institutional factors influence the timing of real estate development. By using data for a region in Poland, the authors also add to knowledge about real estate development in CEE countries.
{"title":"Institutional factors and the timing of land development: a survival analysis applied to the GZM Metropolis in Poland","authors":"Katarzyna Reyman, G. Maier","doi":"10.1108/jerer-04-2021-0021","DOIUrl":"https://doi.org/10.1108/jerer-04-2021-0021","url":null,"abstract":"PurposeThe purpose of the article is to improve the understanding of the role of institutional factors in real estate development. The authors take into account zoning (existence and type), type of right of disposal and type of buyer and seller of property in a multivariate econometric estimation. Dependent variable of the analysis is the time between acquisition of empty land and the application for a building permit, a period when many important development decisions have to be made. This indicator is closely related to debated phenomena like land hording and speculation.Design/methodology/approachThe authors estimate a Cox proportional hazard model with the time between acquisition and application for a building permit as dependent variable and institutional indicators and a number of control variables as explanatory variables. Study area is the GZM Metropolis in the South of Poland. This region shows enough variability in institutional arrangements to allow for this type of analysis.FindingsThe analysis shows that institutional factors significantly influence the real estate development process. In areas that have not issued a zoning plan, the period until the building permit application is significantly longer. When the state is involved in a transaction (as purchaser or seller), it also takes longer until the building permit application is submitted. Although the instrument is usually intended to speed up development, perpetual usufruct implies a longer period until building permit application. Because of the results the authors get for control variables and for robustness checks, the authors are confident of the results of the analysis.Originality/valueTo the authors’ knowledge, this is the first study that deals with the question how institutional factors influence the timing of real estate development. By using data for a region in Poland, the authors also add to knowledge about real estate development in CEE countries.","PeriodicalId":44570,"journal":{"name":"Journal of European Real Estate Research","volume":"41 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2022-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85203952","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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