Transaction Frequency and Commercial Property

Metrics using repeat sale data assume that frequently and infrequently sold properties are similar in capital expenditures, maintenance and other characteristics. Value-added investors concentrate on repositioning properties which requires capital investment and managerial skills. Returns using repe...

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Bibliographic Details
Published inThe journal of real estate finance and economics Vol. 47; no. 4; pp. 640 - 658
Main Authors Chinloy, Peter, Hardin, William G., Wu, Zhonghua
Format Journal Article
LanguageEnglish
Published Boston Springer US 01.11.2013
Springer Nature B.V
Subjects
Capital costs
Capital expenditure
Capital expenditures
Capital gains
Cash flow
Commercial property
Commercial real estate
Competition
Economics
Economics and Finance
Financial Services
Institutional investments
Investment
Investment policy
Investors
Managerial skills
Real estate
Regional/Spatial Science
REITs
Sales
Commercial property price
R33
G14
Rent-price ratio
Cap rate
Real estate returns
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Summary:Metrics using repeat sale data assume that frequently and infrequently sold properties are similar in capital expenditures, maintenance and other characteristics. Value-added investors concentrate on repositioning properties which requires capital investment and managerial skills. Returns using repeat sales likely overstate appreciation by misattributing this investment. Present results show that frequently and infrequently traded properties represent different property populations. The first sale of a repeat transaction sells at a significant discount compared to single sale properties while the second sale transacts at a premium. The results suggest that repeat sale indices may overstate price appreciation and represent returns for a different, relatively small cohort of properties when compared to the large number of properties that transact only once during a specific time period.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0895-5638
1573-045X
DOI:10.1007/s11146-013-9434-z