Determinants of cross-sectional variation in discount rates, growth rates and exit cap rates

Martin Edward Ralph Hoesli, Patric Henry Hendershott, A. Gunnelin, B. Soderberg

Research output: Contribution to journalArticlepeer-review

15 Citations (Scopus)


This study investigates the determinants of key input variables in valuers' discounted cash flow models used for estimating market values for offices. Data from 599 valuations in 2000 from Stockholm, Gothenburg and Malmo are used to explain variation in discount rates, expected growth rates in net operating income and exit cap rates. Our ability to explain the relatively wide variation in appraisal assumptions with plausible covariates generates confidence in the appraisal process. This has important implications because most value and returns indices of commercial real estate worldwide are appraisal based.

Original languageEnglish
Pages (from-to)217-237
Number of pages20
JournalReal Estate Economics
Issue number2
Publication statusPublished - 2004

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