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Alternative Land Price Indexes for Commercial Properties in Tokyo

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  • Diewert, Erwin
  • Shimizu, Chihiro

Abstract

The SNA (System of National Accounts) requires separate estimates for the land and structure components of a commercial property. Using transactions data for the sales of office buildings in Tokyo, a hedonic regression model (the Builder’s Model) was estimated and this model generated an overall property price index as well as subindexes for the land and structure components of the office buildings. The Builder’s Model was also estimated using appraisal data on office building REITs for Tokyo. These hedonic regression models also generate estimates for net depreciation rates which can be compared. Finally, the Japanese Ministry of Land, Infrastructure, Transport and Tourism constructs annual official land prices for commercial properties based on appraised values. The paper compares these official land prices with the land prices generated by the hedonic regression models based on transactions data and on REIT data. The results show that the Builder’s Model using transactions data can be used to estimate Tokyo office market indexes with a reasonable level of precision. The results also revealed that commercial property indexes based on appraisal and assessment prices lag behind the indexes based on transaction prices.

Suggested Citation

  • Diewert, Erwin & Shimizu, Chihiro, 2017. "Alternative Land Price Indexes for Commercial Properties in Tokyo," HIT-REFINED Working Paper Series 75, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hit:remfce:75
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    References listed on IDEAS

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    More about this item

    Keywords

    Commercial property price indexes; System of National Accounts; the builder’s model; transaction-based indexes; appraisal prices; assessment prices; land and structure price indexes; hedonic regressions; depreciation rates;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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