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Is the Office Market Overvalued? A Simple Framework Applied to France

Author

Listed:
  • Jerome Coffinet

    (Banque de France)

  • Etienne Kintzler

    (Banque de France)

Abstract

We develop a simple framework to assess the position of office prices with respect to their fundamentals. Applying the model to France, we show that a constrained office supply and low interest rates mainly explain for the high and increasing trend of office prices in recent years. Nonetheless, we find that the office market is only slightly overvalued in France in late 2017: the deviation of office prices with respect to their fundamental determinants is between 0% and 10%, thus indicating that the market is close to fair value.

Suggested Citation

  • Jerome Coffinet & Etienne Kintzler, 2019. "Is the Office Market Overvalued? A Simple Framework Applied to France," International Real Estate Review, Global Social Science Institute, vol. 22(2), pages 275-306.
    • Handle: RePEc:ire:issued:v:22:n:02:2019:p:275-306
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    References listed on IDEAS

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    Cited by:

    1. Hana Hejlova & Michal Hlavacek & Blanka Vackova, 2020. "Estimating Commercial Property Price Misalignment in the CEE Countries," Working Papers 2020/11, Czech National Bank.

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    More about this item

    Keywords

    Commercial Real Estate; Overvaluation; Office Market; Error-Correction Model;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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