Rental volatility in commercial property markets economics essay

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Rental volatility in commercial property markets economics essay

Variations on a theme - volatility of returns - Property News Magazine

Interest rates for Loan Availability of loans Thus the demand of housing property is governed by the price of the property as well as the interest rates for those making payment by taking loans.

Other factors that impact are the income level and the returns on the property. This is very important and though the purpose for the purchase may be is to live in there; the return is still an important concern. A major factor that has been influential is the variation in interest rates.

The interest rates that are applicable is variable. This is to say that prevailing interest rates will apply. This has tremendously affected the demand wherein the insecurity related to the variation in the price has made the consumers in the market reluctant and thus affected the demand.

The loans for the housing property should have fixed interest charges. This will enable the boost that is required for the market as the apprehension will be reduced related to the increased costs that may be associated if the interest rates increase, that will certainly happen looking at the global financial markets.

Fama, This will however impact the financial institutions but they will be benefited by increased income due to increased in loans for housing property. Thus the fixed interest regime will be helpful for the sector as well as the economy.

This is a one bed apartment with all the modern fittings including furniture, granite flooring, kitchen with all the fittings and exquisite bathroom with laundry also available. The area of the apartment is 80 square meters. It has been observed that a property has been giving an average return on investment of around 9.

These all parameters and the market conditions have been considered while doing the DCF analysis. The other factor that is associated with the property that has been considered is the facilities that have been made available like the apartment is fully furnished including the accessories in the bathroom with complete fittings.

The fully furnished small garden in the front and at the back and the other factors like accessibility to the transport facilities also add to the cost of the property. Lastly the apartment is jut one storey and no other construction is there in the apartment.

Rental volatility in commercial property markets economics essay

These in short give the essence of the facilities in and around the apartment, the housing property considered in the valuation done in the subsequent section. The income of the people staying in this area has been considered in planning the debt repayment in the DCF analysis and the owner share at the start of the purchase of the property considered.

Pietro et al, DCF Analysis For the purpose of DCF Analysis an internet survey was done and the real estate websites were referred for determining the market prices. Thus for the purpose of discounted cash flow analysis the price of the property as on has been determined and to obtain the current price the per annum returns have been used as given in the Year book Australia.The case for commercial property investment as a shelter from the volatility of other markets remains persuasive.

As the market continues to experience a low interest rate environment, with low bond yields and uncertain short-term equity returns, the secure and relatively high income return from prime and good secondary commercial property remains attractive and should form part of a well.

Request PDF on ResearchGate | Price Volatility of Commercial and Residential Property | This article studies the relative volatility of commercial and residential property prices. Empirical.

Rental volatility in commercial property markets economics essay

The Volatility of Real Estate Markets: A Decomposition WILLIAM C. WHEATON WILLIAM C. WHEATON is a professor of economics at Massachusetts Institute of Technology in Cambridge, MA. [email protected] T his research examines the volatility correlates of commercial property decomposi-tions are different than those for apartments.

Commercial property is a property that is designed for the sale of goods and services or for the purpose of manufacture of a product. Residential property is a property, building or solely for the purpose of use by a person or a family to live in on a day-to-day basis.

reflection and comparative analysis of the changing property economic environment.

Key Reasons To Invest In Real Estate

there was greater price volatility in commercial markets, which were more prone to sharp recessionary price drops than residential markets. Leverage ratio for commercial markets (75%) was higher than Rental costs to mortgage costs.

Australian Commercial Property Investment Market: Styles, Performance and Funding management intensive asset class with potential risks of rental income volatility For the Australian commercial property market, the various investment options for investors.

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