How accurate are commercial-real-estate appraisals evidence from 25 years of NCREIF sales data Reportar como inadecuado




How accurate are commercial-real-estate appraisals evidence from 25 years of NCREIF sales data - Descarga este documento en PDF. Documentación en PDF para descargar gratis. Disponible también para leer online.

Abstract

In this study, we provide new evidence on the performance measurement and reporting of commercial real estate returns. We do so by examining the accuracy of commercial-real-estate appraisals that occurred prior to the sale of properties from the NCREIF National Property Index -NPI- during 1984 – 2010, a period which spans two up-and-down cycles of the market. We find that, on average, appraisals are more than 12% above, or below, subsequent sales prices that take place two quarters following the appraisal. Even in a portfolio context, allowing for offsetting positive and negative differences, appraisals are off by an average of 4% – 5 % of value, even after adjusting for capital appreciation during those two quarters. We also provide new evidence regarding how, and by how much, appraised values lag behind sales prices. We find that appraisals appear to lag the true sales prices, falling significantly below in hot markets and remaining significantly above in cold markets. This new evidence provides guidance to investors, regulators and others about how to interpret real-estate indices like the NPI that are based upon appraised values, in both a rising and falling market. Finally, we find that this -appraisal error- is largely systematic; we can explain more than half of the variation in the signed percentage difference in sales price and appraised value. Hence, appraisal errors are not due solely to property-specific heterogeneity.



Item Type: MPRA Paper -

Original Title: How accurate are commercial-real-estate appraisals? evidence from 25 years of NCREIF sales data-

Language: English-

Keywords: appraisal; commercial real estate; commingled real estate fund; NCREIF; real estate-

Subjects: G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice ; Investment DecisionsG - Financial Economics > G2 - Financial Institutions and Services > G23 - Non-bank Financial Institutions ; Financial Instruments ; Institutional InvestorsR - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R33 - Nonagricultural and Nonresidential Real Estate Markets-





Autor: Cannon, Susanne

Fuente: https://mpra.ub.uni-muenchen.de/32589/







Documentos relacionados