Articles:
Simulating Hong Kong's Office
Leasing Market via System Dynamics Modeling
Authors:
Eddie Chi Man Hui and Ka Hung Yu
Start Page: 23
End Page: 43
Volume: 9
Issue Number: 1
Year: 2006
Publication: International Real Estate Review
Abstract: This study
introduces a combined method, on the basis of both system dynamics and
econometric modeling, in forecasting the office rental values in Hong Kong.
The findings suggest that the office rental values in Hong Kong appear to be
more fluctuating when the price level of the office ownership market is
comparatively volatile, likely due to the over-reaction of economic trends
by the supply side of the property market. It is plausible to say
development lags and adjustment cost, under the current land policies in
Hong Kong, are the main attributes behind this phenomenon. In order to
reduce the volatility on the office market, the government should relax the
approval procedures concerning changing land use, and the subsequent
rearrangement of premium payment. Further, the current policies on land
sales need to be revised, especially concerning the application list system.
Those measures could reduce the time required and the transaction cost
incurred for the supply side to adjust to the ever-changing demand.
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