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This is the first comprehensive study on the age profile of new rents, average rents, operating expenses, net operating income, capital expenditure, and net cash flow for office properties in Tokyo. There are four main findings. First, the rate of rental depreciation in Japan is low and explains less than half of the rate of depreciation of property prices, although it is higher in earlier years. Second, average rents exhibit nominal rigidity. Third, approximately half of the observed depreciation in new rents is due to physical deterioration as opposed to functional obsolescence, which is driven by changes in tenant preferences and advances in building technology. Last, operating expenses are independent of age, whereas capital expenditure increases in the first 20 years. Our study contributes to the literature by estimating depreciation rates for commercial real estate rents, costs, and cash flows, with new insights into the detailed age profile and sources of economic depreciation. [ABSTRACT FROM AUTHOR]

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. [ABSTRACT FROM AUTHOR]

Improving the accuracy of deflators is crucial for measuring real GDP and growth rates. However, construction prices are often difficult to measure. This study uses the stratification and hedonic methods to estimate price indices. The estimated indices are based on the actual transaction prices of buildings (contract prices) obtained from the Statistics on Building Starts survey information from the administrative sector in Japan. Compared with the construction cost deflator (CCD), calculated by compounding input costs, the estimated output price indices show higher rates of increase during the economic expansion phase after 2013. This suggests that the profit surge in the construction sector observed in that period is not fully reflected in the CCD. Furthermore, the difference between the two "output-type" indices obtained by stratification and hedonic methods shrinks when the estimation methods are precisely configured. [ABSTRACT FROM AUTHOR]