Is the Office Market Overvalued? A Simple Framework Applied to France
Author
Start Page / End Page
Volume
Issue Number
Year
Publication
Jerome Coffinet, Etienne Kintzler
275 / 306
22
2
2019
International Real Estate Review
Abstract
We develop a simple framework to assess the position of office prices with respect to their fundamentals. Applying the model to France, we show that a constrained office supply and low interest rates mainly explain for the high and increasing trend of office prices in recent years. Nonetheless, we find that the office market is only slightly overvalued in France in late 2017: the deviation of office prices with respect to their fundamental determinants is between 0% and 10%, thus indicating that the market is close to fair value.
Keywords
Commercial Real Estate, Overvaluation, Office Market, Error-Correction Model