[Crealums] New real estate index & derivatives

[MIT Center for Real Estate]

Dear MIT/CRE Alums: 

 

We are pleased to let our alums know about an exciting new development for
the real estate industry in which the Center is playing a central role, as
part of our industry-relevant research program. The MIT Center for Real
Estate will be publishing with monthly updates a new transactions-based
commercial property price index that the Center has developed in cooperation
with Real Capital Analytics, Inc. (RCA). The new RCA-based index has been
sponsored by Real Estate Analytics LLC (REAL) for the purpose of supporting
derivatives trading of commercial investment property, such as index return
swaps and futures. The RCA-based index is now available on the Center's web
site, at:

http://web.mit.edu/cre/research/credl/rca.html

 

A white paper describing the new index is downloadable from the above web
site. And the press release is available at:

http://web.mit.edu/cre/news/061220-rca-index-launch.html

 

The new suite of 29 indexes include monthly, quarterly, and annual
frequencies, with coverage at the national, regional, and some MSA levels,
for the four major commercial property sectors of apartments, office,
industrial, and retail. 

 

The RCA-based indexes are the first regularly produced commercial property
indexes based on repeat sales of the same properties, the same basic index
construction method as the Case-Shiller/S&P housing indexes that underlie
the new Chicago Mercantile Exchange housing futures contracts. Such
econometrically rigorous index construction methods are necessary to track
the same-property price changes that are of the type actually faced by
property investors.

 

The End of the Commercial Real Estate Bull Market: Early Evidence.

 

The latest index results provide solid evidence of the magnitude of the
2003-2005 commercial investment property bull market in the United States
and indicate that for the broad market the "boom" period ended early this
year. From a bottom in February 2002 to a plateau in February 2006, the
national aggregate index rose 66 percent. Since then, the flagship monthly
index has shown no cumulative gain, the longest period of no net gain since
the 2001-2002 recession. The bull market was truly impressive, with no
negative month from August 2003 through September 2005. (See chart below.)




 

Have a happy holiday season and a prosperous 2007! 

 

-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://mailman.mit.edu/pipermail/crealums/attachments/20061220/674a864a/attachment.htm
-------------- next part --------------
A non-text attachment was scrubbed...
Name: not available
Type: image/gif
Size: 9398 bytes
Desc: not available
Url : http://mailman.mit.edu/pipermail/crealums/attachments/20061220/674a864a/attachment.gif
-------------- next part --------------
A non-text attachment was scrubbed...
Name: not available
Type: application/octet-stream
Size: 2092 bytes
Desc: not available
Url : http://mailman.mit.edu/pipermail/crealums/attachments/20061220/674a864a/attachment.obj