The Implicit Pricing of Property Attributes

Principal Investigator:

Professor Neil Crosby, School of Real Estate and Planning, University of Reading

University of Sheffield co-investigator:

Dr Cath Jackson

Project:

August 2012 - August 2013

This project investigates the implicit pricing of property attributes by developing a cross-sectional inter-temporal hedonic function to model the capitalisation rates observed for office properties within the Central London market. It aims to disaggregate implicit risk premia, growth assumptions and depreciation allowances. The research will investigate how risk premia for property attributes vary over time, between submarkets and across investor/fund types.

For practice, the research will inform optimum pricing undertaken by valuers, investors and policy makers by explicitly exploring and extending the understanding of the preferences and decision-making of investors in the office sector. It may also contribute to the debate concerning the difficulties of marking to market under conditions of uncertainty.

For both practice and academia, the project will enable the quantification of a complex, largely qualitative process and enable detailed investigation of investor preferences and behaviour.

Funder:

RICS