Familiarity and the Determination of Yields for Regional Office Property Investments in the UK

John Henneberry and Fotis Mouzakis

Regional Studies, 2014, vol. 48, issue 3, 530-546

Abstract: Henneberry J. and Mouzakis F. Familiarity and the determination of yields for regional office property investments in the UK, Regional Studies . This paper examines how effectively investment yields incorporate spatial variations in risks and returns into property prices. It is hypothesized that the pricing of property investments in non-core UK regions is affected by a pure familiarity heuristic adopted by investors based in London. Consequently, the determination of office yields is based not on the intrinsic investment characteristics of regional markets, but on a core market benchmark combined with a regional premium. This results in very long-term mispricing patterns with implications not just for the office property investment market, but also for the regions, especially those outside the core.

Date: 2014
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Citations: View citations in EconPapers (6)

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DOI: 10.1080/00343404.2013.765556

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