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Paper eres2009_156:
Are Prime Rents an Adequate Proxy for ‘The Market’?

id eres2009_156
authors Haddock, Michael
year 2009
title Are Prime Rents an Adequate Proxy for ‘The Market’?
source 16th Annual European Real Estate Society Conference in Stockholm, Sweden
summary There is a fundamental difficulty in the analysis of performance in European property markets caused by the lack of long-term data series and the poor quality of what data is available. In many cases, the best data that is available over more than the last few years is prime rent and yield series quoted either quarterly or annually. This is in stark contrast to the data available in North America, where data are more objective and reflective of the ‘whole’ market. Two questions therefore arise: - Is it possible to adapt analysis techniques developed in the US, designed to work with objective, ‘whole market’ data to European markets where the available data is scarcer and much more subjective in nature? - Are conclusions based on ‘prime’ rents applicable to the market as a whole, or just representative of a small part of the market? In this paper we have used information available from CB Richard Ellis in a number of European cities to generate average transacted rent series. The relationship between these average rent series and a number of other measures of ‘rent’ such as the traditional prime rent, peak rent agreed, and IPD valuation based series where available is examined to establish whether the differences between the behaviour of prime rents and ’the market’ is significant. We also examine some of the commonly held beliefs about prime rents – that they are less volatile than average rents – that they are leading indicators of whole market movements – to see if they are justified.
series ERES:conference
email michael.haddock@cbre.com
content file.ppt (276,480 bytes)
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ratings
session Price and Rent Determination
last changed 2009/09/16 16:22
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