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Purpose This study aims to explore the spatial externalities of apartment vacancy rates on housing rent by considering multiple vacancy durations. Design/methodology/approach This research uses smart meter data to measure unobservable vacant houses. This study made a significant contribution by applying building-level smart meter data to housing market analysis. It examined whether vacancy duration significantly affected apartment rent and whether the relationship between apartment rent and vacancy rate differed depending on the level of housing rent. Findings The primary finding indicates that there is a significant negative correlation between apartment rent and vacancy duration. Considering the spatial externalities of apartment vacancy rates, the apartment vacancy rates of surrounding buildings did not show any statistical significance. Moreover, quantile regression results indicate that although the bottom 10% of apartment rent levels showed a negative correlation with all vacancy durations, the top 10% showed no statistical significance related to vacancies. Practical implications This study measures the extent of spatial externalities that can differentiate taxation based on housing vacancies. Originality/value The findings indicate that landlords have asymmetric information about their buildings compared with the surrounding buildings, and the extent to which price adjusts for long-term vacancies differs depending on the level of apartment rent.

We propose a new explanation for the persistence of gravity in international investment flows based on new facts about large cross-border commercial real estate transactions. Buyers in these transactions preferentially match with counterparties from own or proximate countries; such affinity-based matching helps alleviate financial investment frictions. We set up and structurally estimate a model of capital allocation in a decentralized market with an investment friction, which delivers the price, volume, and counterparty matching patterns in the data. The model shows that if clusters of high-affinity counterparties lie along historical routes, as in the data, preferential matching can perpetuate gravity relationships.

Real Estate Investment Trusts (REITs) are on-going concerns that invest, divest and recycle capital into properties that provide stable long term distributions for shareholders. REIT property portfolios require renewals through divestment of inefficient assets to be replaced by more efficient assets. While most of the previous literature focuses on the effect of acquisition/divestment event on REIT-level performance, little research has been carried out on property-level renewal process of REIT portfolios. In particular, this paper focuses on (i) the choice of properties for divestment, (ii) the choice of the timing to divest such properties, and (iii) the management strategy leading up to divestment. To address these questions, we use the unique property-level datasets for Japanese REITs that contain information on property characteristics and their performance with half-year frequency while the properties are in the portfolio, that is, from the initial acquisition to the final divestment.First, we investigate the determinants of the property designated for divestment using the probit model. We provide a strong evidence that properties requiring relatively large operation cost and/or are less yield accretive with respect to the REIT portfolio, and/or properties that do not match the geographical focus of the REIT, are likely to be divested. These assets are usually replaced with more efficient assets. Second, we investigate the timing of such divestments using the probit model. We show that properties may be divested after undergoing relatively large drop in capital value. Third, we investigate whether REITs engage in short-term earnings management post the divestment decision. Our fixed-effect panel estimations show that REITs reduce the size of capital expenditure, which is a long-term investment, just before the divestment so that their final net cash flow, which indicates the short-term property performance, look attractive for potential buyers.Further subsample analysis on market dynamics reveals that, unlike the entire sample, REITs seek for capital gain and even divest properties which are efficient for their portfolio during the REIT restructuring periods around 2010, suggesting the need for REITs to liquidate those properties during this time period.

Rolling-time-dummy (RTD) is a hedonic method used by a number of countries to compute their official house price indexes (HPIs). The RTD method requires less data and is more adaptable than other hedonic methods, which makes it well suited for computing higher frequency HPIs (e.g., monthly or weekly). In this article, we address three key issues relating to RTD. First, we develop a method for determining the optimal length of the rolling window. Second, we consider variants on the standard way of linking the current period with earlier periods, and show how the optimal linking method can be determined. Third, we propose three ways of modifying the RTD method to make it more robust to periods of low transaction volume. These modifications could prove useful for countries using the RTD method in their official HPIs.

This study examines how the probability of becoming a professional football player depends on the birth month (relative age effect) and birth order. These two factors are random and cannot be controlled by the athlete. If these factors influence the probability of the occurrence of top athletes, they not only create inequality but also close the disciplines to potentially talented athletes, lowering the level of competition. Therefore, in this study, we statistically clarified the presence or absence of “giftedness of life” by focusing on the birth month and birth order of professional football league players in the Japan Professional Football League (J-League). Our results indicate that the probability of the occurrence of J-League players decreases significantly with increasing birth order and birth month (180 days, from April onward). Moreover, we found that second-born players with an older brother had higher estimated salaries than players without siblings. These results reveal the characteristics of excellent football players and suggest the importance and direction of improvement in talent discovery and development in sports. Based on our results, we recommend improvements in the player training system to buffer the effects of relative age effect and birth order.

In this paper, we examine the role of international capital flows in real estate prices by quantifying the extent foreign buyers overpay for their realty investments as well as the spillover effect of such behavior on property prices domestic buyers pay. Using a unique dataset accounting for about 30,000 realty investment transactions in Australia, Canada, France, Hong Kong, Japan, the Netherlands, the United Kingdom, and the United States, we find the following. First, foreign investors pay significantly higher prices than domestic investors, even after taking a wide variety of controls into account. Second, this paying over the odds becomes smaller the larger the buyers’ exposure to realty investments in the host countries. These results indicate that foreign investors are overcharged when they are less informed about the property market and that the extent to which they are overcharged decreases the more investment experience they have. Third, we did not find any significant spillover effects from overpaying by foreign investors to real estate prices in host countries. This finding is consistent with a group of extant studies employing aggregate-level data to examine the link between international capital flows and real estate prices.

Purpose Houses are durable, so an imbalance between demand and supply occurs after time has passed since initial construction. The purpose of this study is to quantify the extent of this imbalance for existing houses, focusing on the heterogeneity across property segments. Design/methodology/approach This study uses a unique data set on the “inquiry volume” that each property received from an online real estate portal to measure the volume of demand in relation to supply. Simple regressions are conducted in the resale condominium market across the Tokyo metropolitan area. Findings The inquiry volume successfully tracked a recent expected trend in which demand relative to supply is stronger for condominiums in reasonably priced areas, condominiums in convenient, accessible locations, condominiums built within the last 20 years and compact and spacious units. This study also confirms that these trends cannot be captured through heterogeneity in price levels, which has been widely used in previous studies on measuring housing preferences. Practical implications As an indicator of conditions in the housing market, the property-level inquiry volume has strong potential to provide useful information for supply strategies and for the sustainable use of existing housing stocks. Originality/value The originality of this paper is the use of information on the buyer side, which is typically unobservable.

Hidradenitis suppurativa (HS), also known as acne inversa, is a chronic inflammatory skin disease mainly affecting apocrine gland-rich areas of the body with painful nodules, persisted abscess, sinus tracts, and scarring. The etiopathology of HS remains unclearly understood, but the disease is considered as a polygenic autoinflammation condition originating from follicular hyperkeratosis and occlusion. Recent advances concerning the substantial roles of tumor necrosis factor (TNF)-α, interleukin (IL)-1β, IL-17, and IL-23 have accelerated in developing a repertoire of therapeutic biologics in HS. Currently five biologics antagonistic for these different cytokines, adalimumab, anakinra, etanercept, infliximab, and ustekinumab, have been explored in the treatment setting of HS; however, only limited evidence is available for the therapeutic advantage of IL-17 pathway blockade. We present a 47-year-old Japanese man who had a long-standing, debilitating HS complicated with psoriasis, both of which were refractory to a series of the standard treatment. Not only psoriatic skin but also HS lesions responded dramatically to brodalumab, an IL-17 receptor antagonist, accompanied with decrease of validated assessments, namely the Hurley's staging classification and modified Sartorius score. Brodalumab was well tolerated with rapid improvement and no adverse reaction, and finally gave a satisfactory maintenance of disease remission. To our best knowledge, this is the first successful use of anti-IL-17 receptor antibody in a Japanese case with coexistence of HS and psoriasis. We also discuss extending understanding of the potential benefit and current limitation of brodalumab in the treatment of HS.

More than 10 years have passed since studies on green buildings gained attention in the academic and industrial literature. Many studies report the economic value of green buildings, mainly in the U.S. and European markets. An empirical clarification of the dynamics of green premiums has significant implications for future urban sustainability. This study constructed a dataset of Tokyo office rents from 2009 to 2019. We estimated the green office rental premium using a hedonic approach. Our results show that, on average, an office property with a green label gains a premium of approximately 6.5% on contract rents. The Tokyo office market is heterogeneous, and endogeneity is an issue when identifying the green premium. We addressed the endogeneity issue with propensity score clustering. As a result of our estimation, the premium was approximately +5.4% for medium-sized old buildings and +2.6% for large-sized new buildings.

The emergence of the COVID-19 pandemic and working remotely may decrease the advantages of residing in populated areas. This study aims to test the relationship between remote work and changes in neighborhood satisfaction and to discern the difference according to both the status of remote work and the centrality of areas where people live in the relationships between geographic accessibility to neighborhood facilities and changes in neighborhood satisfaction. By using an ordinal logistic regression, we analyzed data from a questionnaire completed by residents of the 23 wards of Tokyo. Working remotely was found to increase neighborhood satisfaction of people living in a central (OR = 1.31) and a noncentral area (OR = 1.50). Remote workers living in single-family homes were found to be less satisfied with their neighborhoods. Less decrease (or increase) in geographic accessibility to eating facilities was found to be related to increase in neighborhood satisfaction for both remote and nonremote workers regardless of the centrality of areas where they live. The findings suggest that populated areas continue to provide benefits which will improve neighborhood satisfaction even after the start of a pandemic; however, there could be a shift of demand for facilities in central areas to noncentral areas beyond the emergence of the pandemic.

The SNA (System of National Accounts) requires separate estimates for the land and structure components of a commercial property. Using transactions data for the sales of office buildings in Tokyo, a hedonic regression model (the Builder’s Model) was estimated and this model generated an overall property price index as well as subindexes for the land and structure components of the office buildings. The Builder’s Model was also estimated using appraisal data on office building REITs for Tokyo. These hedonic regression models also generated estimates for net depreciation rates which can be compared. Finally, the Japanese Government constructs annual official land prices for commercial properties based on appraised values. The paper compares these official land prices with the land prices generated by the hedonic regression models based on transactions data and on REIT data. The results revealed that commercial property indexes based on appraisal and assessment prices lag behind the indexes based on transaction prices.

PurposeWhile consumers did not previously have information on detailed housing features via traditional media, such as magazines, nowadays, due to the progress in information technology, they can access detailed information on various housing features via housing information websites. Therefore, detailed housing features may affect current rents to some extent. This paper aims to identify the effects of detailed housing features on rent and on omitted variable bias in Tokyo, Japan.Design/methodology/approachThis paper applies the hedonic approach. To identify the effects of features which are not observed previously, we use a unique data set that contains various housing features and over 200,000 housing units. This data set enables to simulate the situations when the researcher cannot get some variables, and this simulation shows which variables cause omitted variable bias.FindingsThe analysis shows that housing features significantly influence housing rent. If significant housing feature variables are not included in the hedonic model, the estimated coefficients show omitted variable bias. Additionally, unit-specific features such auto-locking door can cause omitted variable bias on location-specific features such accessibility to downtown.Originality/valuesThis paper shows empirical evidence that detailed housing features can cause omitted variable bias on other features including variables which are often used in previous searches. The result from our unique data set can be a guide for variable selection to reduce omitted variable bias.

Using panel data from 17 countries with varying economic circumstances from 1974 to 2019, we estimate regression models that explain residential property price dynamics by incorporating demographic factors and considering the interaction of those demographics with credit conditions. Our results show the importance of the demographic factors in modeling the long-run equilibrium of residential property prices. We find that the effect of nominal interest rates determined by monetary policy on asset prices varies depending on the country and the degree of population aging at the time. We also find that the persistently optimistic population projections lead to the oversupply of the residential stock in rapidly aging countries, resulting in stagnant residential property markets.

The Tokyo housing market is considered to be one of the fastest evolving markets in the world. In recent years, functions such as TV intercoms, bathroom dryers, system kitchens, and toilets with washlets, which are not often seen in European and US houses, have spread and become common in Japanese houses. Under such circumstances, the importance of various equipment ancillary to housing, together with the location and quality of the building, is increasingly a factor for determining the value of housing in Tokyo. This is because when a new product appears, the old product is ordered to be withdrawn from the market, or its commodity value is greatly depreciated. This study measured the economic value of improving the quality of housing with new equipment in the Tokyo rental housing market and clarified the extent of economic depreciation that is occurring due to obsolescence. According to the obtained results, new functions are being added sequentially to the Japanese rental housing according to the age of the building, and these functions are non-negligible in the determination of housing rent, even when compared with location and building structure. The effect of obsolescence due to the addition of new functions was roughly--5%.

When a durable good (other than housing) is purchased by a consumer, national Consumer Price Indexes typically attribute all of that expenditure to the period of purchase, even though the use of the good extends beyond the period of purchase.

The paper looks at problems associated with measuring the services of owner-occupied housing (OOH) in the Japanese CPI. The paper shows that alternative approaches to measuring the services of OOH lead to quite different measures of CPI inflation for Japan. The Japanese CPI uses a rental equivalence approach to measuring OOH services and uses an index of all paid rents to price these services. However, Japanese rents are very sticky and under these circumstances, it seems more appropriate to use an index of newly contracted rents to value the opportunity cost of using the services of owned dwelling units. The paper examines this issue. It also looks at the adequacy of the sampling approach used in the Japanese CPI and at the problems surrounding the treatment of depreciation in constructing constant quality indexes for paid rents in the Japanese CPI. Finally, hedonic regressions for the quality adjustment of rents are run on an extensive data set.

Housing price fluctuations exert effects on the economy through various channels. More precisely, however, relative prices between housing and other assets prices and goods/services prices are the variable that should be observed.

How can a commercial property price index (CPPI) be defined and constructed? And what kind of relationship does the measurement of commercial property’s value have to the System of National Accounts and to concerns about national financial sectors? In order to answer such questions, this paper aims to outline the concepts that can be used to define and measure the value of commercial property, and to clarify the relationship of such measurement to the System of National Accounts and to the financial system.

This paper highlights some of the themes that emerged from the OECD-IMF Workshop on Real Estate Price Indexes which was held in Paris, November 6–7, 2006.

Fluctuations in real estate prices have substantial impacts on economic activities. In Japan, a sharp rise in real estate prices during the latter half of the 1980s and its decline in the early 1990s led to a decade-long stagnation of the Japanese economy. More recently, a rapid rise in housing prices and its reversal in the United States triggered a global financial crisis. In such circumstances, the development of appropriate indexes that allow one to capture changes in real estate prices with precision is extremely important, not only for policy makers but also for market participants who are looking for the time when housing prices hit bottom. Recent research has focussed on methods of compiling appropriate residential property price indexes. The location, maintenance and the facilities of each house are different from each other in varying degrees, so there are no two houses that are identical in terms of quality. Even if the location and basic structure are the same at two periods of time, the building ages over time and the houses are not identical across time. In other words, it is very difficult to apply the usual matching methodology (where the prices of exactly the same item are compared over time) to housing.

When it comes to methods of quality adjustment for property price indexes, if one looks at the Residential Property Price Indices Handbook published by EuroStat in 2013, it present a variety of methods along with their advantages and disadvantages: (a) Stratification or Mix Adjustment Methods, (b) Hedonic Regression Methods, (c) Repeat Sales Methods, and (d) Appraisal-Based Methods. This is because, in reality, multiple methods have been applied in the estimation of property price indexes.

Some real estate data for sales of detached houses in the Dutch town of “A” is used in order to construct house price indexes using a variety of methods. A main purpose of the paper is to determine whether the different methods generate different empirical results. The data cover 14 quarters of sales, beginning in 2005 and ending in the middle of 2008.

In this paper we investigate the effect of aging population on property (land) prices. A theory of very-long-run portfolio choice is developed for a transition economy from young and growing to rapidly aging population and applied to estimate property price inflation in Japanese municipal markets. The results are stunning. The simulation results in which income factors are assumed to be fixed at the 2005-10 growth level suggest that the average residential property price (land price) in the Japanese municipalities may decrease by as much as 19 percent from the present to 2020, 24 percent to 2030, and 32 percent to 2040.

This paper documents housing rent rigidity under downward pressure, using the monthly household/room-level movement of housing rents through tenancies and vacancies in Tokyo during the period 2000Q1–2017Q2. The consistent overall rent rigidity exists because of the small extensive margin (limited adjustment opportunity) and small intensive margin (rare adjustment in the contract renewal stage). We observe rent rigidity leading to a “tenure surcharge,” that is, sitting tenants pay higher rents than the market rent level because the alternative—high moving costs for tenants—is less attractive. The downward rent rigidity obviously cannot rationalize the conventional explanation of upward rent rigidity in an inflationary context, such as depreciation and/or tenure discount. We show, however, that landlords care about retaining good long-term tenants by offering a small discount during the tenancy, along with a small degree of time/state-dependent adjustments.

Purpose The purpose of this paper is to decompose and measure the microstructure of property investment returns for Tokyo’s residential property markets in as much detail as possible in comparison with office market. Design/methodology/approach Using enterprise value data for property investment trust companies composed of share prices available on capital markets, this study proposed a method of estimating property investment returns corresponding to changes in capital markets, and clarified the distortion in capitalization rate that are formed based on property appraisal prices. Findings The results for residential property showed that as building floor space increased, income and price increased while the discount rate decreased. In particular, a higher return could be obtained from office property than residential property by investing in larger-scale properties. Building age lowered asset price and income for both residential and office property, especially for residential property. Research limitations/implications In Japan, investors believe that investment returns are high for properties close to the city centre, relatively new properties and those with large design or floor space. Therefore, this study first measured how asset prices, income and asset price–income ratios that comprise property investment returns change based on differences in these property characteristics. Second, the reliability/distortion of information that can be observed on the property investment market was measured. Furthermore, there was a significant divergence between discount rates and risk premiums formed by asset or space markets versus capital markets. Practical implications The differences of discount rate and risk premium formed by asset markets versus capital markets indicate that appraisal prices have biases. Thus, when it comes to property investment decisions, it is essential to make active use not just of property investment returns based on appraisal prices formed by asset markets but also information formed by capital markets. Social implications A greater difference was generated in a shrinking market, suggesting that analysing property returns estimated on asset market information alone could lead to erroneous investment decisions. Originality/value This research is the first to use the enterprise value data from real estate investment trust companies composed of share prices available on capital markets for calculating discount rate and risk premium in property market.

Population density that indicates a critical point in population growth is able to estimate from the relationship between population density and population movement. In the case of adopting usual definition of population density, the critical point depends on how to divide the space into unit of measurement. We find proper definition of population density. There are both inhabitable and uninhabitable areas. For population density adjusted by the size of the inhabitable area without agricultural land, the critical population density does not depend on the unit of measurement. We observe this statistical characteristic from detailed Japanese census data and land use data.