R33 - Nonagricultural and Nonresidential Real Estate MarketsReturn

This article deals with the evaluation and application of real estate rate of return - the so-called yield. The principle is that yields can be distinguished at several levels and it is therefore important to look more closely at the input data. It states what are the categories of yield according to the professional public, their methods of calculation and what factors can affect the rate of yield. It is also pointed out that reported yields often lack more detailed information on how they are calculated and what exactly reflects as a result. It is also stated how the rate of yields within each type of real estate has evolved over the last years. Possible impacts of misstatement or application of yield are shown in two case scenarios that are modelled to outline the size of the potential error space within each category of yield.

The article summarizes approaches to constructing real estate indices and considers the advantages and disadvantages of each type of index model. The first part is based on the current literature, the second part of the article is devoted to considerations of the construction of the Czech real estate index for the industrial sector. In conclusion, it summarizes areas of further research in the construction of such Czech index.