A paradigm of inquiry for applied real estate research : integrating econometric and simulation methods in time and space specific forecasting models : Australian office market case study.
MetadataShow full item record
Office space oversupply cost Australia billions of dollars during the 1990-92 recession. Australia, the United States, Japan, the U.K., South Africa, China, Thailand, and many other countries have suffered office oversupply cycles. Illiquid untenanted office buildings impair investors capital and cash flows, with adverse effects on macroeconomics, financial institutions, and individuals. This study aims to develop improved methods for medium term forecasting of office market adjustments to inform individual project development decisions and thereby to mitigate office oversupply cycles. Methods combine qualitative research, econometric estimation, system dynamics simulation, and institutional economics. This research operationalises a problem solving research paradigm concept advocated by Ken Lusht. The research is also indebted to the late James Graaskamp, who was successful in linking industry and academic research through time and space specific feasibility studies to inform individual property development decisions. Qualitative research and literature provided a list of contributing causes of office oversupply including random shocks, faulty forecasting methods, fee driven deals, prisoners dilemma game, system dynamics (lags and adjustment times), land use regulation, and capital market issues. Rather than choosing among these, they are all considered to be causal to varying degrees. Moreover, there is synergy between combinations of these market imperfections. Office markets are complex evolving human designed systems (not time invariant) so each cycle has unique historical features. Data on Australian office markets were used to estimate office rent adjustment equations. Simulation models in spreadsheet and system dynamics software then integrate additional information with the statistical results to produce demand, supply, and rent forecasts. Results include models for rent forecasting and models for analysis related to policy and system redesign. The dissertation ends with two chapters on institutional reforms whereby better information might find application to improve market efficiency.Keywords. Office rents, rent adjustment, office market modelling, forecasting, system dynamics.
Showing items related by title, author, creator and subject.
Pojanavatee, Sasipa (2013)Mutual funds are emerging as an opportunity for investors to automatically diversify their investments in such a way that all their money is pooled and the investment decisions are left to a professional manager. There ...
Cigdem, M.; Wood, Gavin; Ong, Rachel (2015)This Positioning Paper is the first output of a project that aims to forecast future housing subsidies that will accompany projected demographic changes and the challenges these trends may pose for the fiscal sustainability ...
Entries and exits from homelessness: A dynamic analysis of the relationship between structural conditions and individual characteristicsJohnson, G.; Scutella, R.; Tseng, Y.; Wood, Gavin; Guy, J.; Rosanna, S.; Yi-Ping, T.; Gavin, W. (2015)This report examines the relationship between structural factors, individual characteristics and homelessness. Our interest in the interaction of structural conditions and individual characteristics gives rise to two ...