Leverage, liquidity and information in commercial property prices

Jonathan A. Wiley

Journal of Property Research, 2017, vol. 34, issue 2, 77-107

Abstract: Transactions volume and property cash flows appear to have little, if any, predictive value for commercial property price appreciation in the US during 2001 to mid-2015. Price appreciation is predicted by both credit tightening and the market share of highly active investors. Buyer composition (introduced by this study) appears to proxy informational content in the transactions market, as trading patterns for highly active investors are consistent with those possessing informational advantages. Underwriting restrictiveness adversely affects asset prices. Apart from buyer composition and credit policy, aggregate price movement appears largely produced by cycles of investment momentum rather than cycles in commercial property fundamentals.

Date: 2017
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DOI: 10.1080/09599916.2017.1320683

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