Corporate Equity and Commercial Property Market 'Bubbles'

Patric Hendershott, Robert J. Hendershott and Charles R. W. Ward
Additional contact information
Robert J. Hendershott: Finance Department, Leavey School of Business, Santa Clara University, Santa Clara, CA 95053, USA, rhendershott@scu.edu
Charles R. W. Ward: Department of Real Estate and Planning, School of Business, University of Reading, Reading, RG6 6AW, UK, Ward@reading.ac.uk

Urban Studies, 2003, vol. 40, issue 5-6, 993-1009

Abstract: Periodic sharp sustained increases and then reversals in asset prices lead many to posit irrational price 'bubbles'. The general case for bubbles is that asset prices simply move too much given the future cash flows the assets are reasonably likely to produce. A corollary for property is that observed mean reversion in real cash flows is not reflected in investor valuations, resulting in asset values being too high when real cash flows are high and vice versa. This paper summarises some evidence on large corporate equity and commercial property price movements and present arguments for and against the existence of irrational bubbles.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:sae:urbstu:v:40:y:2003:i:5-6:p:993-1009

DOI: 10.1080/0042098032000074281

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