Alternative Land-Price Indexes for Commercial Properties in Tokyo |
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Authors: | Erwin Diewert Chihiro Shimizu |
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Institution: | 1. The University of British Columbia
The University of New South Wales;2. University of Tokyo |
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Abstract: | 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. |
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Keywords: | commercial property price indexes transaction-based indexes appraisal prices assessment prices land- and structure-price indexes hedonic regressions |
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