Investigating the dynamics of, and interactions between, Shanghai office submarkets

White, Michael; Ke, Qiulin

doi:10.1080/09599916.2013.765500

Cited by 15 publications

(6 citation statements)

References 38 publications

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“…Applying both discriminant and neural network analysis, the authors conclude that statistical clustering is more suitable for identifying investment opportunities and risks while the expert-based sector-region classification is sufficient for describing the broad characteristics of a real estate portfolio. White and Ke (2014) validate that certain office locations, such as Pixi and Pudong, located in Shanghai, cannot be viewed as homogeneous or perfect substitutes as there is no convergence in rental performance or interactions among these submarkets.…”

Section: Related Literaturementioning

confidence: 83%

Are corporate office buildings priced differently?

Costa

Fuerst

Mendes‐Da‐Silva

2018

JPIF

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Purpose While broader property-type categories of real estate markets have been scrutinized at microeconomic level in some segments – namely, residential, retail, industrial and hospitality, there is limited evidence showing that local office markets can be viewed as monolithic and economically integrated entities. The purpose of this paper is to investigate how occupiers differ in their willingness to pay for principal office rent determinants in the corporate and non-corporate sectors. Design/methodology/approach A sample of properties located in the largest office market in Latin America is partitioned based on the average size of leasable units. This approach captures interactions between different groups of investors and occupiers, and is commonly adopted by local market practitioners due to lack of detailed information on market participants. The pricing schedules for these two groups of buildings are then empirically compared through hedonic regression analysis and parameter stability tests. Findings The regressions show that corporate and smaller occupier properties form distinct spatial and non-spatial submarkets, but that their temporal patterns are quite similar. Thus, these property-type segments can be classified as imperfect substitutes with distinct pricing schemes, but not as a unique market, as their pricing schedules are not generalizable. Practical implications The results imply that “office properties” are too complex and disparate to be reliably examined with a simple aggregate approach as practiced in developed office market research since the 1980s. The fragmented reality of office properties has important implications for investment decisions and real estate valuation. Originality/value This paper shows that the corporate office market exhibits distinct characteristics and key determinants of office price and rent valuation differ significantly between the corporate and non-corporate segments. The corollary of these findings is that market studies that require reliable estimates of price drivers may be enriched by modeling these two segmented markets separately. It is also important to note that this distinction cuts across the established A/B/C office space quality classification.

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Section: Related Literaturementioning

confidence: 83%

Are corporate office buildings priced differently?

Costa

Fuerst

Mendes‐Da‐Silva

2018

JPIF

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“…The authors conclude that the office market consists of a set of submarkets which are best defined upon real estate agent´s views of market fragmentation as property attributes do not remain constant across different regions of these cities. Recent research from White and Ke (2014) validate that certain office submarkets, such as Pixi and Pudong, located in Shanghai, cannot be viewed as homogeneous or perfect substitutes as the authors do not find convergence in rental performance or interactions among these submarkets. Fuerst et al (2015a) provide evidence of heterogeneous returns among building classes in the United States.…”

Section: Motivation and Backgroundmentioning

confidence: 93%

The Recent Slowdown in Sao Paulo’s Office Market: A Comparison of Hedonic Indices

Costa¹,

Mendes‐Da‐Silva²,

Robinson³

2016

16ª Conferência Internacional Da LARES

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Real estate indices often rely on strong constant quality assumptions. Hedonic techniques are more rigorous than median-price measures to control for quality of the assets in place or the quality of the assets that are put on the market at different times. We use a unique appraisal-based rent dataset from Sao Paulo to create two types of time-dummy measures for office properties. To our records, there appears to be no studies that cover the recent meltdown in this market or that compare the performance of different time-dummy methods. The first modelstandardincludes time dummies, submarket dummies and property-specific attributes. The secondfixed effectis an alternative model, where we consider time dummies, time-varying characteristics (age) and property-specific fixed effects. This latter approach deals with time-unvarying locational and property-specific unobserved heterogeneity. The resulting indices reflect to some extent the cyclicality of rent. Consistent with market segmentation theory, our findings support submarket and building class stratification to account for different niche performance. The standard model is often biased upwards, especially in growth locations and among top-tier properties, where supply is more flexible. This methodology limits our ability to control for properties within submarket level. Rigid time-unvarying hedonics fail to disentangle property-specific features when new buildings are added to the sample non-randomly.

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“…The authors conclude that the office market consists of a set of submarkets which are best defined upon real estate agent's views of market fragmentation as property attributes do not remain constant across different regions of these cities. Recent research from White and Ke (2014) validate that certain office submarkets, such as Pixi and Pudong, located in Shanghai, cannot be viewed as homogeneous or perfect substitutes as the authors do not find convergence in rental performance or interactions among these submarkets. Fuerst et al (2015b) provide evidence of heterogeneous returns among building classes in the United States.…”

Section: Introductionmentioning

confidence: 93%

13ª Conferência Internacional da LARES

2013

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Este estudo tem como objetivo investigar os índices de preços imobiliários disponíveis no mercado brasileiro, avaliar suas utilidades e limitações, e, por fim, sugerir melhorias com base na literatura imobiliária moderna. Os índices imobiliários muitas vezes dependem de fortes pressupostos de qualidade constante e são muito gerais para serem cuidadosamente considerados pelos investidores. As técnicas hedônicas são mais rigorosas do que as medidas de preço médio para controlar a qualidade e local dos ativos que são colocados no mercado em momentos diferentes. Esta pesquisa explica como essas limitações afetam a utilidade dos indicadores disponíveis no mercado brasileiro e como os índices especializados e tecnicamente superiores (e relativamente fáceis de empregar) podem contribuir para melhorar a mensuração do desempenho em mercados imobiliários emergentes. Para isso, utilizamos um conjunto de dados de aluguel de São Paulo para criar dois modelos hedônicos de índice de preços para propriedades comerciais seguindo a literatura existente. Assim, criamos um primeiro modelo que denominamos padrão e um segundo modelo denominado efeito fixo. Demonstramos como o mercado comercial de São Paulo pode ser avaliado com maior critério com base na amostra do estudo além de visualizar os movimentos de mercado recentes. Nossos resultados reforçam que as medidas obtusas disponíveis muitas vezes não conseguem desmembrar aspectos específicos dos ciclos imobiliários, que tendem a ser bastante proeminentes nos mercados imobiliários emergentes.

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Investigating the dynamics of, and interactions between, Shanghai office submarkets

Cited by 15 publications

References 38 publications

Are corporate office buildings priced differently?

Are corporate office buildings priced differently?

The Recent Slowdown in Sao Paulo’s Office Market: A Comparison of Hedonic Indices

13ª Conferência Internacional da LARES

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