Flight to Quality? An Investigation of the Attributes of Sold Properties in Hot and Cold Markets
AbstractThis paper uses sales transaction data in order to examine whether flight from risk phenomena took place in the US office property investment market during the financial crisis of 2007-2009. The effect of the crisis on the pricing of property quality attributes, mainly summarized by the class category of each building, is investigated. In addition, the paper examines how turnover levels were affected by the market downturn and whether there were significant variations between different real estate quality types. The results of the hedonic regression models suggest that the price spread between property classes A, B and C grew significantly during the downturn. We also find that property attributes such as size, height and age are priced significantly different in ‘hot’ and ‘cold’ markets.
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Bibliographic InfoPaper provided by Henley Business School, Reading University in its series Real Estate & Planning Working Papers with number rep-wp2011-04.
Length: 37 pages
Date of creation: 2011
Date of revision:
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Real estate cycles; risk-return relationship; investment;
Find related papers by JEL classification:
- R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets
- D4 - Microeconomics - - Market Structure and Pricing
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
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- Mariya Gubareva & Maria Rosa Borges, 2013. "Typological Classification, Diagnostics, and Measurement of Flights-to-Quality," Working Papers Department of Economics 2013/15, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
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