Premium
Alternative Approaches to Commercial Property Price Indexes for Tokyo
Author(s) -
Diewert Erwin,
Shimizu Chihiro
Publication year - 2017
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/roiw.12229
Subject(s) - depreciation (economics) , economics , balance sheet , price index , property (philosophy) , asset (computer security) , real estate , value (mathematics) , productivity , econometrics , microeconomics , macroeconomics , finance , capital formation , computer science , philosophy , epistemology , profit (economics) , computer security , machine learning , financial capital
The paper studies the problems associated with the construction of price indexes for commercial properties that could be used in the System of National Accounts. Property price indexes are required for the stocks of commercial properties in the balance sheets and related price indexes for the land and structure components of a commercial property are required in the balance sheet accounts for the calculation of the Multifactor Productivity of the Commercial Property Industry. The paper uses a variant of the builder's model that has been used to construct Residential Property Price Indexes. Geometric depreciation rates are estimated for commercial offices in Tokyo using assessment data for REIT. The problems associated with the decomposition of property value into land and structure components are addressed. The problems associated with depreciating capital expenditures on buildings and with measuring the loss of asset value due to early retirement of the structure are also addressed.