What is it about?
A comprehensive approach to cap rates modelling is developed in the paper. The approach consists of two steps, firstly at macroeconomic, and secondly at microeconomic levels. The approach is borrowed from Physics and compares yields to compressibility of gasses. This allows for utilization of methods developed in Physics to be used in commercial yield modelling.
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Why is it important?
The paper presents a fresh approach to yield modelling and allows for estimation of the degree various economic factors influence cap rates. A well-established standard model is already well known within the research community. The model presented in this paper breaks away from the standard model, providing data fit quality which is considerably superior.
Perspectives
I found working on this paper to be a true adventure in breaking the new grounds. Each step, in development of this work, required a considerable amount of thought and contemplation, so to find a way to tackle complexity of the problem.
Moshe Szweizer
CBRE Group Inc
Read the Original
This page is a summary of: A new model for Auckland commercial property yields, Journal of Property Investment & Finance, February 2019, Emerald,
DOI: 10.1108/jpif-06-2018-0043.
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