International Real Estate Review

The recent U.S. financial crisis has been found to be unique compared with previous crises: it started when problems first appeared in the housing market and subprime lending, and then spread to the whole financial system and national economy. Through the securitization of structured private label mortgage products, its impact even reached the international capital markets. To explore the cause of the long and far-reaching effect of the current subprime-induced crisis, we review a series of events and government policies prior, during, and after the subprime and housing crisis. Using qualitative and quantitative models, we show that the low interest rate and passive market supervisory policies made by the U.S. government are among the main drivers of the housing boom. During the housing bust, despite a more aggressive regulatory environment, several conflicting policies that were implemented may have prolonged and deepened the recession. Based on these hypotheses, we argue that contagious real estate cycles can be prevented and/or controlled by more proactive counter-cyclical government intervention.

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Real estate risk, yield modelling and market sentiment: the impact on pricing in European office markets

Journal of European Real Estate Research ◽

10.1108/jerer-06-2020-0032 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Tony McGough ◽

Jim Berry

Keyword(s):

Real Estate ◽

International Capital ◽

Content Type ◽

International Capital Markets ◽

Real Estate Markets ◽

Market Sentiment ◽

Office Markets ◽

Risk Pricing ◽

Changes In Risk ◽

The Impact

PurposeThe financial and economic turmoil that resulted from the Global Financial Crisis (GFC), included a marked increase in the volatility in real estate markets. Property asset prices were impacted by the real economy and market sentiment, particularly concerning the determination of risk. In an economic downturn, the perception of investment risk becomes increasingly important relative to overall total returns, and thus impacts on yields and performance of assets. In a recovery phase, and particularly within an environment of historically low government bonds, risk and return compete for importance. The aim of this paper is to assess the interrelationships and impacts on pricing between real estate risk, yield modelling outcomes and market sentiment in selective European city office markets.Design/methodology/approachThis paper specifically considers the modelling of commercial property pricing in relation to the appetite for risk in the financial markets. The paper expands on previous work by determining a specific measure of risk pricing in relationship to changing financial market sentiment. The methodology underpinning the research specifically examines the scope for using national and international risk pricing within specific real estate markets in Europe.FindingsThis paper addresses whether there is a difference between the impact of risk on the pricing of real estate in international versus regional cities in Europe. The analysis, therefore, determines which city centre office markets in Europe have been most impacted by globalisation including the magnitude on real estate prices and market volatility. The outcome of the paper provides important insights into how changes in risk preferences in the international capital markets have driven and continues to drive yield movements under different market conditions.Research limitations/implicationsThe paper considers the driving forces which have led to the volatile movements of yields, emanating from the GFC.Practical implicationsThis paper considers the property market effects on pricing of commercial real estate and the drivers in selected European cities.Originality/valueThe outcome of the paper provides important insights into how changes in risk preferences in the international capital markets have driven and continue to drive the yield movements in different real estate markets in Europe.

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SHOULD THE PRIVATE SECTOR PROVIDE PUBLIC CAPITAL?

Macroeconomic Dynamics ◽

10.1017/s1365100507060130 ◽

2007 ◽

Vol 11 (3) ◽

pp. 318-346

Author(s):

SANTANU CHATTERJEE

Keyword(s):

Open Economy ◽

Public Capital ◽

Borrowing Constraints ◽

International Capital ◽

Standard Assumption ◽

Production Externalities ◽

International Capital Markets ◽

Private Provision ◽

Large Production ◽

Government Provision

The choice between private and government provision of a productive public good like infrastructure (public capital) is examined in the context of an endogenously growing open economy. The accumulation of public capital need not require government provision, in contrast to the standard assumption in the literature. Even with an efficient government, the relative costs and benefits of government and private provision depend crucially on the economy's underlying structural conditions and borrowing constraints in international capital markets. Countries with limited substitution possibilities and large production externalities may benefit from governments encouraging private provision of public capital through targeted investment subsidies. By contrast, countries with flexible substitution possibilities and relatively smaller externalities may benefit either from governments directly providing public capital or from regulation of private providers. The transitional dynamics also are shown to depend on the underlying elasticity of substitution and the size of the production externality.

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Problems of the US Economic Policy

Voprosy Ekonomiki ◽

10.32609/0042-8736-2013-5-129-143 ◽

2013 ◽

pp. 129-143

Author(s):

V. Klinov

Keyword(s):

Economic Policy ◽

Real Estate ◽

Full Employment ◽

Tax Rates ◽

Equitable Distribution ◽

Investment Rate ◽

The Us ◽

Budget Systems ◽

Enterprise Activity ◽

The U.S

How to provide for full employment and equitable distribution of incomes and wealth are the keenest issues of the U.S. society. The Democratic and the Republican Parties have elaborated opposing views on economic policy, though both parties are certain that the problems may be resolved through the reform of the federal tax and budget systems. Globalization demands to increase incentives for labor and enterprise activity and for savings to secure proper investment rate. Tax rates for labor and enterprise incomes are to be low, but tax rates for consumption, real estate and land should be progressive.

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