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São Paulo’s office market: scenario for the next years

Claudio Tavares de Alencar (Department of Civil Construction, University of São Paulo – Polytechnic School, São Paulo, Brazil)
João Rocha Lima (Department of Civil Construction, University of São Paulo – Polytechnic School, São Paulo, Brazil)
Eliane Monetti (Department of Civil Construction, University of São Paulo – Polytechnic School, São Paulo, Brazil)

Journal of Financial Management of Property and Construction

ISSN: 1366-4387

Article publication date: 7 August 2017

Abstract

Purpose

The purpose of this paper is to simulate possoble scenarios of São Paulo’s office market recovering. In 2006, a previous paper that dealt with the same issue was published which the authors propose to analyse here. After eight years, the São Paulo office market is starting a new phase within its cycle. Then, the first part of this paper, as in Rocha-Lima and Alencar (2006), describes the economic scenario in which investment decisions are made for developing office buildings in the Brazilian market. Afterward, the authors simulated both the necessary period of time for investments in the São Paulo office market to recover attractiveness and time for the increase in the occupation rate to absorb the current vacant spaces.

Design/methodology/approach

These simulations were carried out using simple linear regressions models using the Brazilian gross domestic product (GDP) as explanatory variable to prices and vacancy rates dependent ones.

Findings

The authors have found that the vacant space can be fully re-occupied in the beginning of 2021 or mid of 2022, according to the GDP growth rate, and, from this moment on, the demand for new spaces may grow, and, moreover around 2019, investments may become attractive again in this market.

Originality/value

This paper offers an alternative approach for estimating office building scenarios, especially when the database of the market is scarce. It also permits to evaluate an investment strategy for emerging markets within next years, particularly in São Paulo, Brazil.

Keywords

Citation

Tavares de Alencar, C., Rocha Lima, J. and Monetti, E. (2017), "São Paulo’s office market: scenario for the next years", Journal of Financial Management of Property and Construction, Vol. 22 No. 2, pp. 154-173. https://doi.org/10.1108/JFMPC-12-2015-0038

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited