Strange attractor in the Auckland commercial property market

Moshe Szweizer

Journal of Property Investment & Finance, 2020, vol. 38, issue 6, 579-596

Abstract: Purpose - The purpose of this study is to provide a chaos theory-based framework, which can be used to model commercial property market dynamics. Design/methodology/approach - The paper is presented in two parts. In the first, rigorous mathematical reasoning is entertained, so to derive an attractor describing a set of feedback formulae. In the second part, the attractor definition is used to model the Auckland commercial office market. The model is exposed through a set of seven scenarios allowing for analysis of the market behaviour under various exogenously imposed conditions. Findings - The general behaviour of the model is in agreement with the commercial property market conduct observed in Auckland. The model provides information related to the market turning points and allows for an explanation of some intricate market dynamics. These include the anatomy of a market peak and its response to the liquidity oversupply. Practical implications - The model may be used to expand our understanding of the market performance under various exogenically imposed conditions, which allows for planning of market interventions in a more refined manner. Originality/value - The paper is original, in the way the chaos theory is applied to the property markets modelling and allows for expanding the understanding of the market behaviour.

Keywords: Entropy; Chaos; Auckland property market; Market turning points; Property market modelling; Strange attractor (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jpifpp:jpif-10-2019-0138

DOI: 10.1108/JPIF-10-2019-0138

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