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The purpose of this paper is to extend the studies of commercial property yields by providing a cross-field approach through the implementation of methods used in physics.

Based on the equations used to describe real gases in physics, the commercial property yields are expressed through a model, as a product of two terms. The first term estimates the influence of the income change and investment on yields. The second estimates the yield variation as a function of property size. Additionally, the model combines the macroeconomic and microeconomic components influencing yield adjustment. Calculation of each component involves procedures developed in physics, with the investment volume being linked to the amount of gas and the microeconomic yield being linked to the gas compressibility.

The model was applied to the Auckland office and industrial markets, both to the historic and current cycle. At the macro-level, it was found that the use of accumulation of investment over a relevant cycle, results in a high data to model correlation. When modelling the yields at the micro-level, a relationship between the outlying properties and the yield softening was observed.

The paper provides an enhanced modelling power through association of the cyclic and investment activity with the yield change. Moreover, the model may be used to decouple the local and the international investment components and the extent of their influence on the local property market. Furthermore, it may be used to estimate the influence of the property size on the yield.

This research provides a new cross-field application of modelling techniques and enhances the understanding of factors influencing yield adjustments.

In the light of past financial and economic turmoil, there has been a marked increase in the volatility in real estate markets. This has impacted on the pricing of property assets, partly through market sentiment and particularly concerning risk. It also limits modelling accuracy model accuracy. The purpose of this paper is to create a new variable and model to enhance analysis of what drives real estate yields incorporating market sentiment to risk.

This paper specifically considers the modelling of property pricing within a volatile economic environment. The theoretical context begins by analysing the relationship between property yields and government bonds. The analytical context then moves on to specifically include a measurement of risk which stresses its role and importance in investment markets since the Global Financial Crisis. The model thus incorporates macroeconomic and real estate data, together with an international risk multiplier, which is calculated within the paper.

The paper finds the use of measurements of market sentiment and risk are more powerful tools for modelling yields than previous techniques alone.

This is an initial paper outlining the creation of sentiment and risk measurements in the financial market and showing an example of its application to a commercial real estate market. The implication is that this could add a major new explanatory variable to modelling of yields.

The paper highlights the importance of risk in the pricing of commercial real estate, over and above normal variables. It highlights how this can help explain over and undershooting of yields within commercial real estate which would be of great importance in the investment world.

This paper attempts to explicitly measure market sentiment, pricing of risk and how this impacts real estate pricing.

The paper is motivated by the paucity of empirical research on the determinants of capitalisation rates/yield in the commercial property market. Compared to property price determinants, the capitalisation rate has received significantly less attention. This is somewhat surprising given that the capitalisation rate is a more insightful indicator for investors on commercial property market performance than merely price changes or trends. The capitalisation rate, measured as the ratio of net operating income to the property’s capital value, captures the asset’s overall ability to generate income which is crucial for investors who typically invest in property for their income-generating capacity. The purpose of this paper is to address these issues.

To evaluate the determinants of capitalisation rates, time series analysis was used. The data capture performance in the Australian commercial property market between 2005 and 2018. All macroeconomic and financial data are freely available from official sources such as the Australian Bureau of Statistics and the nation’s central bank. Methodology wise, given the problematic nature of the data such as a mixed order of integration and the possibility of cointegration amongst some of the I (1) variables, the autoregressive distributed lag model was selected given its flexibility and relative lack of assumptions.

Bond rates, market risk premiums, stock market excess returns and other macroeconomic variables were found to drive capitalisation rates of Australian commercial properties. A 1% increase in the bond rate results in approximately 0.3–2.4% increase in capitalisation rates depending on the sub-market. Further, a 1% increase in excess market returns results in a 0.01–0.02% increase in capitalisation rates. Regarding risk premiums, a 100 basis point increase in the BBB spread results in approximately 0.92–1.27% reduction in cap rates in certain markets.

Asset managers will find these results useful in asset allocation strategies. Commercial properties offer attractive investment qualities such as yield stability in periods of economic uncertainty while allowing for the possibility of capital growth through appreciation of the underlying asset. By understanding the factors that affect the capitalisation rate, practitioners may predict emerging trends and identify threats to portfolio return and stability. This allows better integration of commercial property in the construction of portfolios that remain robust in a variety of market conditions.

The contribution to literature is significant given the lack of similar studies in the Australian market. The performance of real estate assets using cap rates as a comparative measure to equities and bonds influences decisions in asset allocation strategies. It provides crucial information for investors to estimate the performance of commercial property. This research supports the notion that both space and capital market indicators jointly affect capitalisation rates. The findings expand the knowledge base relating to commercial properties and validate the assessments of investors, developers and valuers who utilise yield as a performance benchmark for asset allocation strategies.

The purpose of this study is to provide a chaos theory-based framework, which can be used to model commercial property market dynamics.

The paper is presented in two parts. In the first, rigorous mathematical reasoning is entertained, so to derive an attractor describing a set of feedback formulae. In the second part, the attractor definition is used to model the Auckland commercial office market. The model is exposed through a set of seven scenarios allowing for analysis of the market behaviour under various exogenously imposed conditions.

The general behaviour of the model is in agreement with the commercial property market conduct observed in Auckland. The model provides information related to the market turning points and allows for an explanation of some intricate market dynamics. These include the anatomy of a market peak and its response to the liquidity oversupply.

The model may be used to expand our understanding of the market performance under various exogenically imposed conditions, which allows for planning of market interventions in a more refined manner.

The paper is original, in the way the chaos theory is applied to the property markets modelling and allows for expanding the understanding of the market behaviour.

After the Global Financial Crisis in 2008, the impact of expanded liquidity in the financial market has drawn attention. The purpose of this paper is to examine the relationship between liquidity in financial markets and office markets across Asian countries. In particular, the research not only examines the effect of normal liquidity on real estate markets, but also the effects of excess liquidity are specifically highlighted.

This paper uses panel estimation utilizing quarterly data from the first quarter of 2007 to the fourth quarter of 2015. Taking both time and location dimensions into account allows for a more precise estimate of the relationship between liquidity and office market’s yields.

Per the empirical outcome, an increasing excess liquidity tends to decelerate the value of office yields in six major Asian office market centers due to the positive effect on commercial real estate value. This effect is also identified by comparing the difference between the level of fitted yields and actual yields.

The results enhance the understanding of commercial real estate yield determinants. Furthermore, the results can be used to assess the impacts of liquidity on major office markets in Asia.

This paper attempts to uncover the impact of liquidity in financial markets on the office market yields. To better understand the relationship, the concept of excess liquidity is adopted and further exploration of each office market is conducted by comparing the fitted yields, which is computed considering the effects of excess liquidity on yield levels and actual yields.

The financial and economic turmoil that resulted from the Global Financial Crisis (GFC), included a marked increase in the volatility in real estate markets. Property asset prices were impacted by the real economy and market sentiment, particularly concerning the determination of risk. In an economic downturn, the perception of investment risk becomes increasingly important relative to overall total returns, and thus impacts on yields and performance of assets. In a recovery phase, and particularly within an environment of historically low government bonds, risk and return compete for importance. The aim of this paper is to assess the interrelationships and impacts on pricing between real estate risk, yield modelling outcomes and market sentiment in selective European city office markets.

This paper specifically considers the modelling of commercial property pricing in relation to the appetite for risk in the financial markets. The paper expands on previous work by determining a specific measure of risk pricing in relationship to changing financial market sentiment. The methodology underpinning the research specifically examines the scope for using national and international risk pricing within specific real estate markets in Europe.

This paper addresses whether there is a difference between the impact of risk on the pricing of real estate in international versus regional cities in Europe. The analysis, therefore, determines which city centre office markets in Europe have been most impacted by globalisation including the magnitude on real estate prices and market volatility. The outcome of the paper provides important insights into how changes in risk preferences in the international capital markets have driven and continues to drive yield movements under different market conditions.

The paper considers the driving forces which have led to the volatile movements of yields, emanating from the GFC.

This paper considers the property market effects on pricing of commercial real estate and the drivers in selected European cities.

The outcome of the paper provides important insights into how changes in risk preferences in the international capital markets have driven and continue to drive the yield movements in different real estate markets in Europe.

This study aims to assess the factors influencing the adoption of circular bioeconomy practices by crop farmers.

Data collected from 303 farmers in the region of Western Macedonia (WM) were used to identify the adoption factors of the circular bioeconomy. Principal component analysis (PCA) and exploratory factor analysis (EFA) techniques were applied through a custom-designed and specially structured questionnaire.

The results reveal four main motivations that lead farmers to adopt circular bioeconomy practices in their farming activities: interest in physical-economic resources and factors related to production and consumption; technology and renewable energy and the environment.

This study is based solely on farmers in WM. Furthermore, this study assumes that there will be a strategy to promote a circular bioeconomy under the auspices of the government.

Few studies have focused on the perspectives of crop farmers and what encourages them to adopt circular bioeconomy practices in their crops. Existing barriers are related to economic incentives and constraints. The more circular bioeconomy practices farmers adopt, the greater the positive impact on the environment and rural development, and the factors influencing the adoption of these practices are investigated here.

This study aims to investigate the determinants of credit spreads in hotel loans securitized into commercial mortgage-backed securities (CMBS) between 2010 and 2015.

The sample represents 1,579 US hotel fixed interest rate whole loans with an aggregate mortgage value of $26.6bn at loan origination. The relationship between credit spreads and property, loan and market characteristic is examined via multiple regression analysis. Additionally, the method of 2-stage least squares is used to control for endogeneity bias and identify the effect of the loan-to-value (LTV) ratio on credit spreads.

The multiple regression models explain 80 per cent of the variation in credit spreads and show a significant association of credit spreads with hotel and loan characteristics and market conditions. The findings indicate the debt coverage ratio to be the most important predictor of credit spreads followed by the loan maturity term, implied capitalization rate, LTV and yield curve. The results show the debt yield premium to be a stronger predictor of credit spreads than the debt yield ratio. The spread between the debt yield ratio and mortgage interest rate could be used in future research as an instrumental variable to identify the effect of the LTV on credit spreads.

This study is limited to the CMBS market and the period after the financial crisis. Additional limitations include sample selection bias, exclusion of multi-property loans and variable interest rate loans.

Interest rate increases in an expanding economy would likely increase the cost of borrowing for hotel owners leading to higher debt service payments and lower profitability. If an increase in interest rates is offset by a decline in credit spreads, hotel owners will still benefit from the ensuing stability in borrowing interest rates. The evidence also suggests that CMBS lenders favor select service and extended stay hotels. Owners and operators of these efficient and profitable hotels will likely obtain loans with lower credit spreads given their lower risk of default.

The current study provides evidence on the effects of loan and property characteristics in the pricing of loan risk and serves to inform CMBS market participants about the factors that drive credit spreads in hotel mortgage loans.

The purpose of this paper is to consider the likely effect on capital values of prime retail property in major UK urban centres from any legislative ban of upward‐only rent reviews (UORRs) from commercial leases.

The opinion of Leeds‐based valuers regarding changes to yield and rent following a hypothetical ban of UORRs was surveyed and the implied effect on capital values calculated. Rental valuation data were obtained for a portfolio of prime retail properties located in Leeds and its satellite commercial centres, forming a case study. The data were combined with survey responses to develop a valuation model to further consider, in an applied context, the effect on capital values as a result of prohibiting UORRs. The hypothesis tested is that, immediately following enactment, prohibition of UORRs will cause a reduction in capital values of prime retail property in major UK urban centres.

The conclusion drawn from the research is that, based on contemporary professional opinion, the hypothesis is likely to be true though the extent of the reduction will vary as a function of specific lease and property characteristics.

The behaviour of valuers and the issue of subjectivity in valuation is a limitation of this positivist research. An alternative phenomenological approach, perhaps with structured interviews at its core, might produce alternative findings.

This research attempts to quantify the effect on capital values on prime retail property following any ban of upwards only rent reviews, a subject that holds a high level of contemporary interest with all property stakeholders.

A recent study found state bond bank participants continually realize considerable interest cost savings. Savings were calculated as differences in interest costs of bond bank loans and the bond offerings participants would have sold as alternatives to loans, (alternative market offerings). The present evaluation determines the sources of the savings. Savings are generated by not only differences in issue characteristics of bond bank issues and alternative market offerings, but also differential impacts of the same market forces and institutional factors on the interest costs of both types of sales. These findings verify that bond bank issues and alternative market offerings sell in different sub-markets, and confirm municipal bond market segmentation.