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CRE Director and Faculty Present Research at University of Tokyo and Hitotsubashi University in Japan

CRE in Japan


April 30, 2018

LAST MONTH, Albert Saiz and David Geltner traveled to Tokyo Japan to present their research with University of Tokyo and Hitotsubashi University in a series of workshops on Real Estate Finance, and on Real Estate and the Macro Economy.  It was a highly engaging and successful experience for everyone.

March 26th 2018
University of Tokyo – Center for Advanced Research in Finance (CARF) Workshop on Real Estate Finance

Professor Geltner presented a talk entitled:

Analytical Tools & Recent Findings: Selected Research Projects of the MIT Real Estate Price Dynamics Platform

 This talk introduced the Center’s new Price Dynamics Platform (which is sponsored by Real Capital Analytics Inc. and headed by Dr. Alex van de Minne) and briefly reviewed several of the recently completed or on-going research projects at the Platform. Among 10 projects of the Platform that Professor Geltner described, four were singled out in more depth.

Price-Point Indexes of US Commercial Property Investment Performance

In this project that was completed last year for the Real Estate Research Institute, van de Minne & Geltner found that high-price-point (generally larger, newer, better located) properties in the U.S. have more volatility, cycle amplitude, and slightly higher average price growth (capital return), while low-price-point properties lag behind in time. Using a version of the Treynor Ratio (Risk-adjusted Return), the research finds that High Price-Point properties display a substantially lower Risk-Adjusted Return. (The graph below shows the estimated price-point indexes ranging from low – black – to high – yellow – price-points.)

Other research projects covered briefly in the presentation included*:

Repeat-Sales Based Supply & Demand Reservation Price Indexes (including “Constant-Liquidity Price Indexes”) at Granular Level

Authors: Dorinth van Dijk, David Geltner & Alex van de Minne

Synthetic total return transaction-based indexes for granular US property markets

Authors: David Geltner & Alex van de Minne

Forecasting US commercial property prices using Dynamic Factor Modeling (DFM)

-DFMs are structural time series models that reduce a large number of related time series into a few common factors

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*All of these papers are (or soon will be) available on the PDP’s new website which will be launching soon.


March 27th 2018
Hitotsubashi – RIETI Workshop on Real Estate and the Macro Economy

BOTH Professors Geltner and Saiz presented at the RIETI Workshop. Prof. Geltner presented on-going work about depreciation in Tokyo office buildings, co-authored with Professor Chihiro Shimizu (Nihon University and a Research Affiliate of the PDP), Professor Jiro Yoshida (Penn State University and CRE Class of 1999 alum), and Kohei Kauai (Head of Research for CRE Industry Partner Xymax Corporation). The paper is entitled:

How Rents and Expenditures Depreciate: A Case of Tokyo Office Properties

In this study, the goal is to analyze Japanese commercial building lifespans, and also to make some comparisons with depreciation in U.S. commercial buildings. It is determined through the study that in Tokyo rents decline little with the age of the building but hold a short economic lifespan of about 40-50 years, suggesting that demolition and redevelopment occur before the original building’s productivity is much diminished. The lifespan of U.S. commercial buildings, in comparison, is 100 years on average (Geltner-Bokhari 2015). The study suggests “economic obsolescence” as a factor in driving this premature redevelopment of commercial buildings in Tokyo, and it raises interesting questions as to why or how is it that there is so much more economic obsolescence in Tokyo.

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March 27th 2018
University of Tokyo

Jerry Carlino, Albert Saiz

Beautiful City: Urban Growth, Leisure, and Aesthetics

What Drives Urban and Residential Real Estate Growth in the USA? 

There is a need to quantify the increasing role of amenities and environmental and architectural beauty in creating attractive living areas. Cities such as: NYC, Paris, Florence, Barcelona, London, Singapore and Tokyo- bring in abundant tourism and new residents attracted by their beauty and abundant opportunities for leisure: what is exactly that draws people to these places? The Director of MIT Center for Real Estate, Albert Saiz and Jerry Carlino (Federal Reserve Bank of Philadelphia), set out to provide measurable correlates of city attractiveness and evaluate the different importance of characteristics that make a city attractive for leisure activities in the U.S. Their study also finds that urban attractiveness is now the main predictor of urban growth and housing demand in the U.S., together with low taxation. 

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