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Alternative Land‐Price Indexes for Commercial Properties in Tokyo
Author(s) -
Diewert Erwin,
Shimizu Chihiro
Publication year - 2020
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.12443
Subject(s) - real estate , hedonic regression , depreciation (economics) , database transaction , price index , economics , index (typography) , econometrics , hedonic index , real estate investment trust , hedonic pricing , regression analysis , transaction data , investment (military) , industrial production index , agricultural economics , database , finance , macroeconomics , microeconomics , statistics , computer science , mathematics , production (economics) , law , world wide web , profit (economics) , financial capital , political science , politics , capital formation
The System of National Accounts (SNA) requires separate estimates for the land and structure components of a commercial property. Using transactions data for the sales of office buildings in Tokyo, a hedonic regression model (the “builder’s model”) was estimated and this model generated an overall property price index as well as subindexes for the land and structure components of the office buildings. The builder’s model was also estimated using appraisal data on office building real estate investment trusts (REITs) for Tokyo. These hedonic regression models also generated estimates for net depreciation rates, which can be compared. Finally, the Japanese government constructs annual official land prices for commercial properties based on appraised values. The paper compares these official land prices with the land prices generated by the hedonic regression models based on transactions data and on REIT data. The results reveal that commercial property indexes based on appraisal and assessment prices lag behind the indexes based on transaction prices.