Monetary Policies and European Office Markets Dynamics

Arnaud Simon, Alain Coen and Benoit Lefebvre
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Arnaud Simon: DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique
Alain Coen: Département de finance [Montréal] - UQAM - Université du Québec à Montréal = University of Québec in Montréal
Benoit Lefebvre: Département de finance [Montréal] - UQAM - Université du Québec à Montréal = University of Québec in Montréal

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Abstract: The purpose of this paper is to study the consequences of unconventional monetary policies on Europe's commercial real estate market. To investigate the role of money supply on real estate markets dynamics, we use panel modelling. Our main objective is to analyze the relationships between office price indexes and monetary variables. Our panel analysis focuses on price dynamics across 16 main office markets in Europe between 2009 and 2019. We have constructed for each market a monetary index suitable for commercial real estate. Our robust results, corrected for the presence of errors-in-variables, report that a positive relationship exists between the global money supply and office prices. Moreover, the largest markets seem more affected by the massive injections of liquidity from the central banks, especially those from the European Central Bank (ECB). We highlight significant differences among office markets in Europe.

Keywords: Real estate; office pricesdynamics; Monetary supply; European markets; panel estimation (search for similar items in EconPapers)
Date: 2022
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Published in The Journal of Real Estate Research, 2022, 44 (4)

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04603417

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