Real Estate

This article analyzes the hedging potential of real estate and especially looks at the impact of lease contracts in various countries around the world on the inflation hedge capability for both expected and unexpected inflation. The dataset consists of direct real estate rent and capital value data for 59 cities/MSAs in 25 countries between 1991 and 2020 to make international comparison over a long time period possible. The results indicate that real estate is a good hedge against inflation, and especially against unexpected inflation.

California is finally poised to lift parking requirements across the state. Here’s why that would be a huge win for the climate.

Cutting carbon cuts "fossilflation" — and yes, that needs to be balanced against "greenflation." The Inflation Reduction Act tackles both, but getting the balance right will be key.

Housing affordability has become the main policy challenge for most large cities in the world. Zoning, rent control, housing vouchers, and tax credits are the main levers employed by policy makers. We build a new dynamic stochastic spatial equilibrium model to evaluate the effect of these policies on house prices, rents, residential construction, labor supply, output, income and wealth inequality, as well as the location decision of households within the city. The analysis incorporates risk, wealth effects, and resident landlords.

I study whether banks' loan loss provisioning contributes to economic downturns, by examining the U.S. housing market. Specifically, I examine the aggregate effects of banks' delayed loan loss recognition (DLR) on house prices during the Great Recession and the channels through which these potential effects arose. I construct ZIP-code-level exposure to banks' DLR before the crisis and compare high- and low-exposure ZIP codes during the crisis to examine the aggregate effects of banks' DLR on the housing market.

We analyze the impact of the Second Avenue Subway (Q-train) construction on local real estate prices, which capitalize the benefits of transit spillovers. We find evidence of higher real estate prices in the vicinity of areas served by the new Q-train, relative to other areas in Manhattan's Upper East Side. Only 30% of the private value created by the subway leads is captured through property taxes, and is insufficient to cover the cost of the subway. Value capture through targeted property tax increases can help close the funding gap.

The covid-19 crisis has led to a sharp deterioration in firm and bank balance sheets. The government has responded with a massive intervention in corporate credit markets. We study equilibrium dynamics of macroeconomic quantities and prices, and how they are affected by government intervention in the corporate debt markets. We find that the interventions should be highly effective at preventing a much deeper crisis by reducing corporate bankruptcies by about half, and short-circuiting the doom loop between corporate and financial sector fragility.

It is tempting to dismiss personal responsibility for lowering one’s carbon footprint. After all, it was bp that popularised the concept in the mid-aughts, telling everyone that it was “time to go on a low-carbon diet”.

This article empirically examines the magnitude of risk premiums for direct real estate investments on a global basis. As this article analyzes ex-ante risk premiums over more than 25 years consistently across the world, it enhances current knowledge about the regional differences between risk premiums and helps long-term investors with their global portfolio allocation over time. On a global level, the authors find a risk premium of 4.1% for Gordon’s growth and 3.7% for two-stage growth model. The periodic growth model shows a slightly lower risk premium of 3.1%.