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An ex post comparative evaluation of office rent prediction models

Russell Chaplin (Assistant lecturer, Department of Land Economy, University of Cambridge, Cambridge, UK)

Journal of Property Valuation and Investment

ISSN: 0960-2712

Article publication date: 1 March 1998

985

Abstract

Commercial property is regarded by many as functioning in a relatively inefficient market, so that opportunities exist to earn abnormal gains through the exploitation of information which is not reflected in prices. Property portfolio managers therefore rely to some extent on predictions or forecasts of future commercial property market performance as a tool to aid investment decisions. This paper seeks to conduct an ex post comparative evaluation exercise for “consensus” office rent models in the UK, common explanatory variables being derived from a literature review and from a survey of practitioners’ operational models. Three alternative valuation based rent indices are used as the dependent variables. Models are selected and ranked according to historic fit and used to predict five years ahead given perfect foresight. The paper finds that the best fitting models are not the best predicting models. Generally there is no relationship between the predictive rank of a model and the fit rank of a model

Keywords

Citation

Chaplin, R. (1998), "An ex post comparative evaluation of office rent prediction models", Journal of Property Valuation and Investment, Vol. 16 No. 1, pp. 21-37. https://doi.org/10.1108/14635789810205074

Publisher

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MCB UP Ltd

Copyright © 1998, MCB UP Limited

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