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SUMMARY:Efficiency in the UK commercial property market: A long-run perspe
 ctive - Dr Steven Devaney\,  University of Aberdeen
DTSTART:20101124T160000Z
DTEND:20101124T170000Z
UID:TALK27609@talks.cam.ac.uk
CONTACT:Ellen Ihrig
DESCRIPTION:Informational efficient prices are a necessary requirement for
  optimal resource allocation in the real estate market. Prices are informa
 tional efficient if they reflect buildings' benefit to marginal buyers\, t
 hereby taking account of all available information on future market develo
 pment. Prices that do not reflect available information may lead to over- 
 or undersupply if developers react to these inefficient prices. In this st
 udy\, we examine the efficiency of the UK commercial office market and the
  interaction between prices\, construction cost\, and new supply. We colla
 te a dataset for the City of London office market that includes informatio
 n on price multipliers (1 / yield) and their theoretical determinants\, as
  well as on office supply\, and employ this in our study. First\, we asses
 s if real estate prices are in accordance with fundamental values\, thereb
 y testing for informational efficiency. By comparing prices and fundamenta
 l values\, we can measure informational inefficiency and explore possible 
 causes for it. Second\, we assess if developers reacted correctly to price
  signals. Development (or the lack thereof) should be triggered by deviati
 ons between fundamental values and cost\; if prices do not reflect fundame
 ntal values\, then\, in theory\, they should have no impact on development
  decisions.		
LOCATION:Mill Lane Lecture Rooms\, Room 9
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