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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 generated estimates for net depreciation rates which can be compared. Finally, the Japanese Government 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 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," Microeconomics.ca working papers erwin_diewert-2017-8, Vancouver School of Economics, revised 28 Sep 2017.
  • Handle: RePEc:ubc:pmicro:erwin_diewert-2017-8
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    References listed on IDEAS

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    1. Diewert, W. Erwin & Shimizu, Chihiro, 2016. "Hedonic regression models for Tokyo condominium sales," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 300-315.
    2. Erwin Diewert & Chihiro Shimizu, 2017. "Alternative Approaches to Commercial Property Price Indexes for Tokyo," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(3), pages 492-519, September.
    3. Diewert, W. Erwin & Huang, Ning & Kate Burnett-Isaacs, Kate, 2016. "Developing Land and Structure Price Indexes for Ottawa Condominium Apartments," Microeconomics.ca working papers erwin_diewert-2016-13, Vancouver School of Economics, revised 23 Nov 2016.
    4. Neil Crosby & Colin Lizieri & Patrick McAllister, 2010. "Means, motive and opportunity? Disentangling client influence on performance measurement appraisals," Journal of Property Research, Taylor & Francis Journals, vol. 27(2), pages 181-201, April.
    5. W. Erwin DIEWERT & Jan de HAAN & Rens HENDRIKS, 2011. "The Decomposition of a House Price Index into Land and Structures Components: A Hedonic Regression Approach," The Valuation Journal, National Association of Romanian Valuers, vol. 6(1), pages 58-105.
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    8. W. Erwin Diewert & Jan de Haan & Rens Hendriks, 2015. "Hedonic Regressions and the Decomposition of a House Price Index into Land and Structure Components," Econometric Reviews, Taylor & Francis Journals, vol. 34(1-2), pages 106-126, February.
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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;

    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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