IDEAS home Printed from https://ideas.repec.org/a/eme/jpifpp/v27y2009i2p120-139.html
   My bibliography  Save this article

An econometric analysis of Shanghai office rents

Author

Listed:
  • Qiulin Ke
  • Michael White

Abstract

Purpose - Shanghai is the most important economic centre in China. It also has the nation's largest modern office market in terms of floorspace and investment values. However, as with office markets in other cities and countries, the Shanghai market displays rental volatility. This paper aims to examine this issue. Design/methodology/approach - Rental volatility is examined by econometrically constructing a long‐run equilibrium relationship between rent and underlying demand and supply side factors. In order to establish the validity of this model, it is tested for the presence of a cointegrating vector. From this a short‐run dynamic adjustment model is constructed. This is an error correction mechanism that links the short‐ and long‐run models. The impact of office vacancies, foreign direct investment, and changes in the real interest rate on the office market are explicitly considered. Findings - The results indicate that both demand (as represented by gross domestic product (GDP)) and supply (stock) are significant determinants of rents. Space demand is found to be both price and income elastic. In the short‐run model the error correction term is significant and correctly signed. In comparison to other office markets, the Shanghai market adjusts rather slowly. Foreign direct investment is found to have a positive impact on long‐run rents and the vacancy rate is found to impact on short‐term rental adjustment. Originality/value - The Shanghai office market is the most important in China. However, it has displayed significant rental volatility. This paper is the first to examine explicitly the rental adjustment process in this office market. The results suggest a market that is performing as expected by economic theory but which nevertheless displays relatively slow adjustment to market imbalances.

Suggested Citation

  • Qiulin Ke & Michael White, 2009. "An econometric analysis of Shanghai office rents," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 27(2), pages 120-139, March.
  • Handle: RePEc:eme:jpifpp:v:27:y:2009:i:2:p:120-139
    DOI: 10.1108/14635780910937836
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/14635780910937836/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://www.emerald.com/insight/content/doi/10.1108/14635780910937836/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://libkey.io/10.1108/14635780910937836?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zeno Adams & Roland Füss, 2012. "Disentangling the Short and Long-Run Effects of Occupied Stock in the Rental Adjustment Process," The Journal of Real Estate Finance and Economics, Springer, vol. 44(4), pages 570-590, May.
    2. Qiulin Ke & Michael White, 2015. "Retail rent dynamics in two Chinese cities," Journal of Property Research, Taylor & Francis Journals, vol. 32(4), pages 324-340, December.
    3. Michael White & Qiulin Ke, 2014. "Investigating the dynamics of, and interactions between, Shanghai office submarkets," Journal of Property Research, Taylor & Francis Journals, vol. 31(1), pages 26-44, March.
    4. Catherine Bruneau & Souad Cherfouh, 2015. "Long-run equilibrium for the Greater Paris office market and short-run adjustments," Journal of Property Research, Taylor & Francis Journals, vol. 32(4), pages 301-323, December.
    5. Shizhen Wang & David Hartzell, 2021. "Real Estate Return in Hong Kong and its Determinants: A Dynamic Gordon Growth Model Analysis," International Real Estate Review, Global Social Science Institute, vol. 24(1), pages 113-138.
    6. John McCartney, 2012. "Short and long-run rent adjustment in the Dublin office market," Journal of Property Research, Taylor & Francis Journals, vol. 29(3), pages 201-226, April.

    More about this item

    Keywords

    China; Office buildings; Rents;
    All these keywords.

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:jpifpp:v:27:y:2009:i:2:p:120-139. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.