Open AccessInternational Real Estate Review
Author(s) -
Eddie C.M. Hui,
AUTHOR_ID,
Kam Hung,
AUTHOR_ID
Publication year - 2006
Publication title -
journal of the asian real estate society
Language(s) - English
Resource type - Journals
ISSN - 1029-6131
DOI - 10.53383/100067
Subject(s) - real estate , renting , transaction cost , order (exchange) , volatility (finance) , cost approach , database transaction , business , payment , economics , property market , finance , real estate development , political science , computer science , law , programming language
This study introduces a combined method, on the basis of both system dynamics and econometric modeling, in forecasting the office rental values in Hong Kong. The findings suggest that the office rental values in Hong Kong appear to be more fluctuating when the price level of the office ownership market is comparatively volatile, likely due to the over-reaction of economic trends by the supply side of the property market. It is plausible to say development lags and adjustment cost, under the current land policies in Hong Kong, are the main attributes behind this phenomenon. In order to reduce the volatility on the office market, the government should relax the approval procedures concerning changing land use, and the subsequent rearrangement of premium payment. Further, the current policies on land sales need to be revised, especially concerning the application list system. Those measures could reduce the time required and the transaction cost incurred for the supply side to adjust to the ever-changing demand.