Estimating Constant-Quality Capitalization Rates and Capitalization Effects of Below-Market Financing

Dice Center Working Paper No. 98-14

23 Pages Posted: 10 Dec 1998

See all articles by Patric H. Hendershott

Patric H. Hendershott

University of Aberdeen - Centre for Property Research; National Bureau of Economic Research (NBER)

Bengt Turner

Uppsala University - Institute for Housing and Urban Research

Date Written: November 1998

Abstract

Using data on 403 property transactions in Stockholm in the early 1990s, we illustrate how a microdata base can be used to compute "constant quality" cap rate series. We show a wide disparity between apartment and commercial series so calculated and series computed as simple averages of individual property cap rates. In the process, we find evidence of full capitalization of below-market financing in apartment prices.

JEL Classification: R31, R32

Suggested Citation

Hendershott, Patric H. and Turner, Bengt, Estimating Constant-Quality Capitalization Rates and Capitalization Effects of Below-Market Financing (November 1998). Dice Center Working Paper No. 98-14, Available at SSRN: https://ssrn.com/abstract=140112 or http://dx.doi.org/10.2139/ssrn.140112

Patric H. Hendershott (Contact Author)

University of Aberdeen - Centre for Property Research ( email )

Aberdeen AB24 2UF
Scotland

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Bengt Turner

Uppsala University - Institute for Housing and Urban Research ( email )

S-801 29 Gavle
Sweden
462 614 7823 (Phone)
462 614 7802 (Fax)

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