| Abstract [eng] |
This research aims to determine factors that influence commercial real estate (CRE) investment yields in the Baltic States, given infrequent comparable transactions. Traditional models use risk-free rates, risk premiums, and rent measures to predict yields. However, many other macroeconomic, market, and sustainability indicators are proven to be important and enhance forecasting power. Considering factors that have historically significantly affected CRE yields globally, the research aims to create models relevant to the Baltic market using the ordinary least squares time-series regression. The analysis uses monthly data over 2016-2023. GDP, Covid-presence, rents, and certified sustainable stock impact prime office yields. In retail, prime yield is determined by GDP, unemployment, Covid-presence, and investment volumes. The retail model has a positive constant term, signaling heightened investment risk, ceteris paribus. Following that, the research recommends separating traditional retail from multifunctional projects. Inflation, FDI, GDP, rents, investment volumes, and certified stock matter in the industrial yield analysis. Based on the short-term modeling and available forecasts, the Baltic office and industrial yields are expected to decrease, while the retail yields should see an upward trend. Investors should consider the lagged effect of some indicators when engaging in CRE transactions. The classical yield formula is invalid in the Baltics, assuming a more comprehensive selection of explanatory variables. The tested novel sustainability feature adds sales premium in the office and industrial segments. Baltics should be considered a single CRE investment market to comprehend the region’s competitiveness. The author’s approval is required for publication of the research results. |
