The Real Estate Conundrum in the CEE Office Markets: Thinking Too Big?

ISET Working Paper Series WP 001-10

38 Pages Posted: 15 Aug 2012

See all articles by Frédéric Laurin

Frédéric Laurin

University of Quebec at Trois-Rivières

John-John D'Argensio

affiliation not provided to SSRN

Thea Goginashvili

Tbilisi State University (TSU) - International School of Economics (ISET)

Date Written: June 1, 2010

Abstract

In this paper, we develop a methodology assessing if office market risks and property prices in Central and Eastern European (CEE) cities have been accurately valuated. Using the evolution of Western European office real estate market as a benchmark, we are able to estimate predicted property prices and capitalization rates for each CEE cites since the transition period, given their respective actual real estate and economic conditions. Results show that investors’ valuations were in fact not too far apart from the predicted value based on real estate and economic fundamentals. We also find that the macroeconomic environment and the general country risk assessment have a stronger effect on property prices in CEE than in Western European cities, compared to pure real estate variables.

Keywords: office property market, risk valuation, real estate, Europe

JEL Classification: C13, G12

Suggested Citation

Laurin, Frédéric and D'Argensio, John-John and Goginashvili, Thea, The Real Estate Conundrum in the CEE Office Markets: Thinking Too Big? (June 1, 2010). ISET Working Paper Series WP 001-10, Available at SSRN: https://ssrn.com/abstract=2129543 or http://dx.doi.org/10.2139/ssrn.2129543

Frédéric Laurin (Contact Author)

University of Quebec at Trois-Rivières ( email )

3351, boul. des Forges, POBox 500
Trois-Rivières, Québec G9A 5H7
Canada
+1 819 376 5011 ext. 3118 (Phone)

HOME PAGE: http://www.fredericlaurin.com

John-John D'Argensio

affiliation not provided to SSRN ( email )

Thea Goginashvili

Tbilisi State University (TSU) - International School of Economics (ISET) ( email )

16 Zandukeli Street
Tbilisi, 0108
Georgia

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