IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-03611776.html
   My bibliography  Save this paper

Commercial real estate prices and COVID-19

Author

Listed:
  • Martin Hoesli

    (GSEM - Geneva School of Economics and Management, University of Aberdeen)

  • Richard Malle

    (LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - CNAM - Conservatoire National des Arts et Métiers [CNAM] - HESAM - HESAM Université - Communauté d'universités et d'établissements Hautes écoles Sorbonne Arts et métiers université, BNP-Paribas)

Abstract

Purpose The article analyzes the effects of the coronavirus disease 2019 (COVID-19) pandemic on commercial real estate prices, with a particular focus on European markets. Design/methodology/approach The authors start by highlighting caveats to bear in mind when referring to direct real estate indices. The authors then analyze the behavior of commercial real estate prices during the pandemic, emphasizing differences across property types. For that purpose, the authors use data for both direct and listed real estate and further discuss changes in the main factors affecting commercial real estate pricing. The article then turns to discussing the likely trajectory of commercial real estate prices in the future. Findings The authors report that retail and hospitality properties and to a lesser extent office buildings have been affected the most by COVID-19, while the residential and industrial sectors have been less affected by the crisis. The authors maintain that the future trajectory of prices will vary across sectors and that the type and location of assets will become increasingly important in their valuation. Originality/value This paper provides for a better understanding of the behavior of commercial real estate prices during the COVID-19 pandemic.

Suggested Citation

  • Martin Hoesli & Richard Malle, 2022. "Commercial real estate prices and COVID-19," Post-Print hal-03611776, HAL.
    • Handle: RePEc:hal:journl:hal-03611776
    DOI: 10.1108/JERER-04-2021-0024
    Note: View the original document on HAL open archive server: https://cnam.hal.science/hal-03611776
    as

    Download full text from publisher

    File URL: https://cnam.hal.science/hal-03611776/document
    Download Restriction: no
    File URL: https://libkey.io/10.1108/JERER-04-2021-0024?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Hoesli, Martin & Oikarinen, Elias, 2012. "Are REITs real estate? Evidence from international sector level data," Journal of International Money and Finance, Elsevier, vol. 31(7), pages 1823-1850.
    2. Duca, John V. & Ling, David C., 2020. "The other (commercial) real estate boom and bust: The effects of risk premia and regulatory capital arbitrage," Journal of Banking & Finance, Elsevier, vol. 112(C).
    3. David M. Geltner, 1993. "Estimating Market Values from Appraised Values without Assuming an Efficient Market," Journal of Real Estate Research, American Real Estate Society, vol. 8(3), pages 325-346.
    4. Gregory H. MacKinnon & Ashraf Al Zaman, 2009. "Real Estate for the Long Term: The Effect of Return Predictability on Long‐Horizon Allocations," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(1), pages 117-153, March.
    5. Jean‐Christophe Delfim & Martin Hoesli, 2021. "Robust desmoothed real estate returns," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(1), pages 75-105, March.
    6. Robert Johnson, 2000. "Monetary policy and real estate returns," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 24(3), pages 283-293, September.
    7. Michael Joyce & David Miles & Andrew Scott & Dimitri Vayanos, 2012. "Quantitative Easing and Unconventional Monetary Policy – an Introduction," Economic Journal, Royal Economic Society, vol. 122(564), pages 271-288, November.
    8. repec:arz:wpaper:eres2012-232 is not listed on IDEAS
    9. David C. Ling & Andy Naranjo, 2015. "Returns and Information Transmission Dynamics in Public and Private Real Estate Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(1), pages 163-208, March.
    10. Jean-Christophe Delfim & Martin Hoesli, 2019. "Real Estate in Mixed-Asset Portfolios for Various Investment Horizons," ERES eres2019_174, European Real Estate Society (ERES).
    11. Martin Hoesli & Jon Lekander & Witold Witkiewicz, 2004. "New International Evidence on Real Estate as a Portfolio Diversifier," Journal of Real Estate Research, American Real Estate Society, vol. 26(2), pages 161-206.
    12. Martin Hoesli & Elias Oikarinen, 2021. "Does listed real estate behave like direct real estate? Updated and broader evidence," Applied Economics, Taylor & Francis Journals, vol. 53(26), pages 3023-3042, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Victor Elsa Sapphira & Razali Muhammad Najib & Ali Hishamuddin Mohd., 2023. "The Dynamics of the Impact of the Covid-19 Pandemic on Pan-Asia’s Real Estate Investment Trusts," Real Estate Management and Valuation, Sciendo, vol. 31(4), pages 11-22, December.
    2. Woei Chyuan Wong & Edie Erman Che Johari & Shazida Jan Mohd Khan & Siti Nurazira Mohd Daud & Mohd Yushairi Mat Yusoff & Hafirda Akma Musaddad, 2023. "From Outbreak to Vaccination: An Analysis of the Commercial Property Market Reaction to COVID-19 in Malaysia," International Real Estate Review, Global Social Science Institute, vol. 26(3), pages 267-298.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martin Hoesli & Richard Malle, 2021. "Commercial Real Estate Prices and Covid-19," Working Papers hal-03186131, HAL.
    2. Tim A. Kroencke & Felix Schindler & Bertram I. Steininger, 2018. "The Anatomy of Public and Private Real Estate Return Premia," The Journal of Real Estate Finance and Economics, Springer, vol. 56(3), pages 500-523, April.
    3. Andrey Pavlov & Eva Steiner & Susan Wachter, 2018. "The Consequences of REIT Index Membership for Return Patterns," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 46(1), pages 210-250, March.
    4. Ying Fan & Abdullah Yavas, 2023. "Price Dynamics in Public and Private Commercial Real Estate Markets," The Journal of Real Estate Finance and Economics, Springer, vol. 67(1), pages 150-190, July.
    5. William Mingyan Cheung & James Chicheong Lei & Desmond Tsang, 2016. "Does Property Transaction Matter in the Price Discovery of Real Estate Markets?," International Real Estate Review, Global Social Science Institute, vol. 19(1), pages 27-49.
    6. Graeme Newell, 2021. "Future research opportunities for Asian real estate," International Journal of Urban Sciences, Taylor & Francis Journals, vol. 25(2), pages 272-290, April.
    7. Martin Hoesli & Graeme Newell & Muhammad Jufri Bin Marzuki & Rose Neng Lai, 2022. "The Performance and Diversification Potential of Non-Listed Value-Add Real Estate Funds in Japan," JRFM, MDPI, vol. 15(5), pages 1-16, April.
    8. Jean‐Christophe Delfim & Martin Hoesli, 2021. "Robust desmoothed real estate returns," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(1), pages 75-105, March.
    9. Coën, Alain & Lefebvre, Benoit & Simon, Arnaud, 2018. "International money supply and real estate risk premium: The case of the London office market," Journal of International Money and Finance, Elsevier, vol. 82(C), pages 120-140.
    10. Lin Mi & Allan Hodgson, 2018. "Real estate's information and volatility links with stock, bond and money markets," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(S1), pages 465-491, November.
    11. Simon Stevenson, 2016. "Macro-Economic and Financial Determinants of Comovement across Global Real Estate Security Markets," Journal of Real Estate Research, American Real Estate Society, vol. 38(4), pages 595-624.
    12. Muhammad Jufri Marzuki & Graeme Newell, 2020. "A global investment opportunity in non-listed infrastructure for institutional investors," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 39(3), pages 239-255, May.
    13. Marton Lotz & Daniel Ruf & Johannes Strobel, 2023. "Uncertainty premia in REIT returns," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(2), pages 372-407, March.
    14. Füss, Roland & Ruf, Daniel, 2021. "Bank systemic risk exposure and office market interconnectedness," Journal of Banking & Finance, Elsevier, vol. 133(C).
    15. Nazlioglu, Saban & Gupta, Rangan & Gormus, Alper & Soytas, Ugur, 2020. "Price and volatility linkages between international REITs and oil markets," Energy Economics, Elsevier, vol. 88(C).
    16. Christian Rehring, 2012. "Real Estate in a Mixed‐Asset Portfolio: The Role of the Investment Horizon," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 40(1), pages 65-95, March.
    17. Martin Hoesli & Kustrim Reka, 2013. "Volatility Spillovers, Comovements and Contagion in Securitized Real Estate Markets," The Journal of Real Estate Finance and Economics, Springer, vol. 47(1), pages 1-35, July.
    18. Massimo Guidolin & Manuela Pedio & Milena T. Petrova, 2023. "The Predictability of Real Estate Excess Returns: An Out-of-Sample Economic Value Analysis," The Journal of Real Estate Finance and Economics, Springer, vol. 67(1), pages 108-149, July.
    19. Fasanya, Ismail O. & Oyewole, Oluwatomisin J., 2023. "On the connection between international REITs and oil markets: The role of economic policy uncertainty," Resources Policy, Elsevier, vol. 81(C).
    20. Nazlioglu, Saban & Gormus, N. Alper & Soytas, Uğur, 2016. "Oil prices and real estate investment trusts (REITs): Gradual-shift causality and volatility transmission analysis," Energy Economics, Elsevier, vol. 60(C), pages 168-175.

    More about this item

    Keywords

    Pandemic; COVID-19; Commercial real estate prices; Office; Retail; Hospitality; G12; G23; R33;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-03611776. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.