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Are there benchmarks in public real estate?

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  • Economics
  • Political Science


6EKramer Page 1 The impact of house price index specification levels on the risk profile of housing corporations European Real Estate Society Conference Stockholm, June 24-27, 2009 Bert Kramer Tessa Kuijl, Marc Francke Ortec Finance Research Center Page 2 Contents � Introduction � House price indices � Impact on sales revenue � Impact on solvency � Conclusions Page 3 Introduction - I � Dutch housing corporations under political pressure: � Subject to corporation tax (> €500 mln/year); � Compulsory urban renewal levy (€75 mln/year); � Increase energy efficiency of housing stock; � Increase production; � Negative publicity; � Tightened supervision; � In times of : � Falling house prices due to little demand on the owner-occupied market. � Liquidity problems for some housing corporations. Page 4 Introduction - II � Increasing field of tension between guaranteeing financial continuity and social objectives. � Asset Liability Management (ALM) becomes increasingly important to obtain insight into financial risk connected to specific social and financing strategies. Page 5 ALM for housing corporations Loans Capital Simulation Policy: Rent, maintenance, sales, investments, demolition/newly built, treasury Uncertainty: construction costs inflation, interest rates, house prices Risk analysis Balance sheet Real estate Page 6 House price indices - I � Used (a.o.) to calculate risk and return on sales programs � Up till now: Dutch national house price index used � Renes and Jokovi (2008): not one house market, but several regional markets in the Netherlands � Recently, lower level house price indices have become available � Francke et al (2009): statistical properties differ per house type and region � Research question: Analyze impact of specification level of house price index on risk-return pro

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