THE REAL ESTATE RISK IN CENTRAL AND EASTERN EUROPEAN OFFICE MARKETS: THINKING TOO BIG?

Frédéric Laurin and John-John D’Argensio

ERES from European Real Estate Society (ERES)

Abstract: In this paper, we investigate the evolution of office market risks and property prices in Central and Eastern European (CEE) cities since the transition period. We develop a methodology assessing if office property markets have been accurately evaluated in CEE cities, using as a benchmark the past evolution of the office markets in Western European cities. We are then able to estimate a predicted property price and capitalization rate for each CEE cites, given their actual real estate and economic conditions. Results show that investorsí valuations are in fact not too far apart from the predicted value based only on real estate and economic fundamentals. The macroeconomic environment, however, seems to have a stronger effect on property prices in CEE than real estate factors, contrary to Western European cities.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2010-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2010_286

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