Energy performance certificates in the Turin real estate market

2017 ◽  
Vol 10 (2) ◽  
pp. 149-169 ◽  
Author(s):  
Elena Fregonara ◽  
Diana Rolando ◽  
Patrizia Semeraro
Keyword(s):  
Real Estate ◽  
House Prices ◽  
Energy Performance ◽  
Real Estate Market ◽  
Market Liquidity ◽  
Hedonic Model ◽  
Price Variation ◽  
Content Type ◽  
Time On The Market ◽  
The Impact

Purpose The purpose of this paper is to assess the impact of the Energy Performance Certificate (EPC) on the Italian real estate market, focusing on old buildings. The contribution of EPC labels to house prices and to market liquidity was measured to analyze different aspects of the selling process. Design/methodology/approach A traditional hedonic model was used to explain the variables of listing price, transaction price, time on the market and bargaining outcome. In addition to EPC labels, the building construction period and the main features of apartments were included in the model. A sample of 879 transactions of old properties in Turin in 2011-2014 was considered. Findings A first hedonic model let us suppose that low EPC labels (E, F and G) were priced in the market although EPC labels explained only 6-8 per cent of price variation. A second full hedonic model, which included apartment characteristics, revealed that EPC labels had no impact on prices. Originality/value In Italy EPC has been mandatory for house transactions since 2009, so there are few studies on the effect of EPC on the Italian real estate market at least to our knowledge. Furthermore, unusually for the Italian context, in this paper also transaction prices were analyzed, in addition to the more frequently used listing prices.

Foreign investment in Australian residential properties

2019 ◽  
Vol 12 (2) ◽  
pp. 166-180 ◽  
Author(s):  
Hassan F. Gholipour ◽  
Hooi Hooi Lean ◽  
Reza Tajaddini ◽  
Anh Khoi Pham
Keyword(s):  
Real Estate ◽  
Foreign Investment ◽  
House Prices ◽  
Real Estate Market ◽  
Housing Development ◽  
Housing Construction ◽  
Annual Data ◽  
Content Type ◽  
Residential Properties ◽  
The Impact

Purpose The purpose of this study is to examine the impact that foreign investment in existing houses and new housing development has on residential house prices and the growth of the housing construction sector. Design/methodology/approach The analysis is based on a panel cointegration method, estimated using annual data for all Australian states and territories spanning the period of 1990-2013. Findings The results indicate that increases in foreign investment in existing houses do not significantly lead to increases in house prices. On the other hand, a 10 per cent increase in foreign investment for housing development decreases house prices by 1.95 per cent. We also find that foreign real estate investments have a positive impact on housing construction activities in the long run. Originality/value Existing studies used aggregate foreign real estate investment in their analyses. As foreign investment in existing houses and foreign investment for housing development have different impacts on the demand and supply sides of housing market, it is crucial that the analysis of the effects of foreign investment in residential properties on real estate market is conducted for each type differently.

scholarly journals Cap rates and risk: a spatial analysis of commercial real estate

2018 ◽  
Vol 35 (1) ◽  
pp. 25-43
Author(s):  
Florian Unbehaun ◽  
Franz Fuerst
Keyword(s):  
Real Estate ◽  
Risk Perceptions ◽  
Large Scale ◽  
Risk Premia ◽  
Real Estate Market ◽  
Commercial Real Estate ◽  
Data Series ◽  
Large Set ◽  
Content Type ◽  
The Impact

Purpose This study aims to assess the impact of location on capitalization rates and risk premia. Design/methodology/approach Using a transaction-based data series for the five largest office markets in Germany from 2005 to 2015, regression analysis is performed to account for a large set of asset-level drivers such as location, age and size and time-varying macro-level drivers. Findings Location is found to be a key determinant of cap rates and risk premia. CBD locations are found to attract lower cap rates and lower risk premia in three of the five largest markets in Germany. Interestingly, this effect is not found in the non-CBD locations of these markets, suggesting that the lower perceived risk associated with these large markets is restricted to a relatively small area within these markets that are reputed to be safe investments. Research limitations/implications The findings imply that investors view properties in peripheral urban locations as imperfect substitutes for CBD properties. Further analysis also shows that these risk premia are not uniformly applied across real estate asset types. The CBD risk effect is particularly pronounced for office and retail assets, apparently considered “prime” investments within the central locations. Originality/value This is one of the first empirical studies of the risk implications of peripheral commercial real estate locations. It is also one of the first large-scale cap rate analyses of the German commercial real estate market. The results demonstrate that risk perceptions of investors have a distinct spatial dimension.

Real estate development in the city of Athens during the financial crisis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Maria Nikitidou ◽  
Fragiskos Archontakis ◽  
Athanasios Tagkalakis
Keyword(s):  
Financial Crisis ◽  
Real Estate ◽  
Structural Characteristics ◽  
House Prices ◽  
Real Estate Market ◽  
Structural Factors ◽  
Data Set ◽  
Content Type ◽  
Capital Financing ◽  
The City

Purpose This study aims to determine how the prices of residential properties in the Greek real estate sector are affected by their structural characteristics and by the prevailing economic factors during recession. Design/methodology/approach Based on 13,835 valuation reports for the city of Athens, covering a period of 11 years (2006–2016), this study develops a series of econometric models, taking into account both structural characteristics of the property market and the macroeconomic relevant variables. Finally, the city of Athens is divided into sub-regions and the different effects of the structural factors in each area are investigated via spatial analysis confirming the validity of the baseline model. Findings Findings show that the size, age, level, parking and storage space can explain the property price movements. Moreover, the authors find evidence that it is primarily house demand variables (e.g. the annual average wage, the unemployment rate, the user cost of capital, financing constraints and expectations about the future course of the house market) that affect house prices in a statistically significant manner and with the correct sign. Finally, using a difference-in-differences approach, this study finds that an increase in house demand (on account of net migration) led to higher house prices in smaller and older than in larger and younger apartments in areas with high concentration of immigrants. Originality/value This study uses a novel data set to help entities, individuals and policy-makers to understand how the recent economic and financial crisis has affected the real estate market in Athens.

scholarly journals Liquidity in global real estate securities markets

2016 ◽  
Vol 34 (4) ◽  
pp. 321-346 ◽  
Author(s):  
Nicole Lux ◽  
Alex Moss
Keyword(s):  
Real Estate ◽  
Stock Market ◽  
Market Liquidity ◽  
Company Size ◽  
Small Companies ◽  
Stock Performance ◽  
Content Type ◽  
The Usa ◽  
Market Capitalisation ◽  
The Impact

Purpose – The purpose of this paper is to test the relationship between liquidity in listed real estate markets, company size and geography during different market cycles, specifically pre-crisis (2002-2006) and post-crisis (2010-2014). Further, the study analyses the impact of stock liquidity on stock performance. In a previous study the authors examined the impact of liquidity on the valuation of European real estate shares. The result showed that there is a strong relationship between liquidity, valuation and market capitalisation post the Global Financial Crisis. Design/methodology/approach – The paper studies the linkages between regional market liquidity and company size for 60 listed real estate companies globally and determines the key drivers of company stock market liquidity pre- and post-crisis as well as the impact on stock performance. Analysis of variance is used to test cross-sectional independence in market liquidity combined with the Tukey’s post hoc test. The selected test indicators of liquidity to capture market depth and market tightness are daily stock turnover as percentage of market capitalisation and daily bid-ask spreads. Findings – Findings confirm previous studies that market liquidity factors are correlated globally over time indicating markets interdependence. However, sample groups by company size and geography form independent samples with different sample means, thus specific liquidity levels in each market may be different. First, stock turnover levels have not recovered post-crisis to pre-crisis levels in the majority of markets while spreads have continued moving downward to nearly insignificant levels in line with the rest of the equity market. Second, with regards to stock performance, the European bias previously detected is not apparent in the USA, and there is no evidence of the small cap vs large cap effect of small companies achieving superior returns, although smaller companies have outperformed in Europe and Asia in each of the last three years (2012-2014). Practical implications – The key implication is that although spread levels for smaller companies are higher, implying a slight risk premium when investing in small companies, this did not manifest into consistent superior stock market returns in the periods studied. In a mature market such as the USA or UK, liquidity levels in terms of stock turnover are higher and spreads are lower thus reducing trading costs, making them more attractive for investors. Originality/value – This research brings together previous analysis on stock market liquidity and stock performance on a global market level. It further tests the dependence of market liquidity on two key indicators, namely, geography and company size and analyses market changes with respect to liquidity pre- and post-crisis.

scholarly journals Modelling the impact of earthquake activity on real estate values: a multi-level approach

2017 ◽  
Vol 10 (1) ◽  
pp. 73-90 ◽  
Author(s):  
Berna Keskin ◽  
Richard Dunning ◽  
Craig Watkins
Keyword(s):  
Real Estate ◽  
Perceived Risk ◽  
House Prices ◽  
Insurance Companies ◽  
Earthquake Risk ◽  
Earthquake Activity ◽  
Content Type ◽  
Multi Level ◽  
Environmental Events ◽  
The Impact

Purpose This paper aims to explore the impact of a recent earthquake activity on house prices and their spatial distribution in the Istanbul housing market. Design/methodology/approach The paper uses a multi-level approach within an event study framework to model changes in the pattern of house prices in Istanbul. The model allows the isolation of the effects of earthquake risk and explores the differential impact in different submarkets in two study periods – one before (2007) and one after (2012) recent earthquake activity in the Van region, which although in Eastern Turkey served to alter the perceptions of risk through the wider geographic region. Findings The analysis shows that there are variations in the size of price discounts in submarkets resulting from the differential influence of a recent earthquake activity on perceived risk of damage. The model results show that the spatial impacts of these changes are not transmitted evenly across the study area. Rather it is clear that submarkets at the cheaper end of the market have proportionately larger negative impacts on real estate values. Research limitations/implications The robustness of the models would be enhanced by the addition of further spatial levels and larger data sets. Practical implications The methods introduced in this study can be used by real estate agents, valuers and insurance companies to help them more accurately assess the likely impacts of changes in the perceived risk of earthquake activity (or other environmental events such as flooding) on the formation of house prices in different market segments. Social implications The application of these methods is intended to inform a fairer approach to setting insurance premiums and a better basis for determining policy interventions and public investment designed to mitigate potential earthquake risk. Originality/value The paper represents an attempt to develop a novel extension of the standard use of hedonic models in event studies to investigate the impact of natural disasters on real estate values. The value of the approach is that it is able to better capture the granularity of the spatial effects of environmental events than the standard approach.

scholarly journals Measuring the Effect of Location on House Prices in Italy

2020 ◽  
pp. 54-62
Author(s):  
Gaetano Lisi ◽  
Mauro Iacobini
Keyword(s):  
Real Estate ◽  
House Prices ◽  
House Price ◽  
Real Estate Market ◽  
Hedonic Model ◽  
Hedonic Price ◽  
Dummy Variables ◽  
Hedonic Price Method ◽  
Housing Submarkets ◽  
Real Estate Assets

The Italian housing market is characterised by both a strong heterogeneity of real estate assets and a reduced number of property sales. These features, indeed, hamper the use of the hedonic price method, namely, the method that is mostly used for assessing the house prices and for estimating the monetary value of housing characteristics. In this paper, therefore, a hedonic model with dummy variables that identify housing submarkets is used to achieve two important results: enabling greater use of multiple regression analysis in the study of the Italian real estate market, and catching, in the simplest possible manner, the effect of location on house price. Indeed, the house's location is, together with the area in square metres, the housing characteristic that most influences the house price.

Loss Aversion and Market Liquidity in the Real Estate Market

2014 ◽  
Vol 22 (2) ◽  
pp. 223-249
Author(s):  
Sun Young Park
Keyword(s):  
Real Estate ◽  
Loss Aversion ◽  
Real Estate Market ◽  
Commercial Real Estate ◽  
Market Liquidity ◽  
The Real Estate ◽  
The Real Estate Market ◽  
Expectation Hypothesis ◽  
Property Sales ◽  
The Impact

The most commonly observed risk averse behavior in the commercial real estate market is loss aversion on the part of investors; i.e., investors are more sensitive to prospective losses than to prospective gains. This observation leads to the natural question : Does the market rationally anticipate investors' loss aversion? If not, then does loss aversion become stronger in a relatively illiquid market? The answer to these questions provides strategically important implications to institutional investors. We propose to explore the impact of loss aversion on the commercial real estate market by testing two competing hypotheses : (1) the rational market expectation hypothesis and (2) the liquidity spiral hypothesis. The rational market expectation hypothesis holds that the market rationally anticipates investors' behavioral loss aversion. As a result, the interaction between lagged market liquidity and loss aversion does not have an impact on the probability of property sales. On the other hand, the liquidity spiral hypothesis holds that the interaction between market liquidity and loss aversion has an impact on the probability of property sales due to the self-fulfilling feedback effect between loss aversion and market liquidity. In the context of REITs' property transactions, we find partial evidence for the liquidity spiral hypothesis : private market liquidity and stock market liquidity each has an additional impact on the sale probability of property.

Algorithm of real estate mass appraisal with inequality restricted least squares (IRLS) estimation

2020 ◽  
Vol 13 (2) ◽  
pp. 161-179
Author(s):  
Mariusz Doszyń
Keyword(s):  
Real Estate ◽  
Least Squares ◽  
Econometric Model ◽  
A Priori ◽  
Ordinary Least Squares ◽  
Real Estate Market ◽  
Negative Consequences ◽  
Content Type ◽  
Low Efficiency ◽  
The Impact

Purpose The purpose of this paper is to present an algorithm of real estate mass appraisal in which the impact of attributes (real estate features) is estimated by inequality restricted least squares (IRLS) model. Design/methodology/approach This paper presents the algorithm of real estate mass appraisal, which was also presented in the form of an econometric model. Vital problem related to econometric models of mass appraisal is multicollinearity. In this paper, a priori knowledge about parameters is used by imposing restrictions in the form of inequalities. IRLS model is therefore used to limit negative consequences of multicollinearity. In ordinary least squares (OLS) models, estimator variances might be inflated by multicollinearity, which could lead to wrong signs of estimates. In IRLS models, estimators efficiency is higher (estimator variances are lower), which could result in better appraisals. Findings The final effect of the analysis is a vector of the impact of real estate attributes on their value in the mass appraisal algorithm. After making expert corrections, the algorithm was used to evaluate 318 properties from the test set. Valuation errors were also discussed. Originality/value Restrictions in the form of inequalities were imposed on the parameters of the econometric model, ensuring the non-negativity and monotonicity of real estate attribute impact. In case of real estate, variables are usually correlated. OLS estimators are then inflated and inefficient. Imposing restrictions in form of inequalities could improve results because IRLS estimators are more efficient. In the case of results inconsistent with theoretical assumptions, the real estate mass appraisal algorithm enables having the obtained results adjusted by an expert. This can be important for low quality databases, which is often the case in underdeveloped real estate markets. Another reason for expert correction may be the low efficiency of a given real estate market.

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