INTERNATIONAL FINANCIAL CENTRES, OFFICE MARKET RENTS AND VOLATILITY
||INTERNATIONAL FINANCIAL CENTRES, OFFICE MARKET RENTS AND VOLATILITY
||Book of Abstracts: 15th Annual European Real Estate Society Conference in Kraków, Poland
||Despite continuing developments in information technology and the growing economic significance of the emerging Eastern European, South American and Asian economies, international financial activity remains strongly concentrated in a relatively small number of international financial centres. For example, BIS figures suggest that 85% of foreign exchange transactions and 77% of international debt issuance take place in just ten centres; the top five stock exchanges account for 61% of global equity market capitalisation. That concentration of financial activity requires a critical mass of office occupation and creates demand for high specification, high cost space. It also links the office markets of those cities into a network of global capital flows with impacts on volatility and drivers of risk which, in turn, has implications for diversification and portfolio strategy. This paper examines office rents and capital values for a sample of world cities in relation to city size, national economic aggregates, geographical location and economic function using a range of statistical techniques and seeks to explore the linkage between global financial activity and property market volatility.
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