PurposeThe purpose of this paper is to simulate possoble scenarios of São Paulo’s office market recovering. In 2006, a previous paper that dealt with the same issue was published which the authors propose to analyse here. After eight years, the São Paulo office market is starting a new phase within its cycle. Then, the first part of this paper, as in Rocha-Lima and Alencar (2006), describes the economic scenario in which investment decisions are made for developing office buildings in the Brazilian market. Afterward, the authors simulated both the necessary period of time for investments in the São Paulo office market to recover attractiveness and time for the increase in the occupation rate to absorb the current vacant spaces.Design/methodology/approachThese simulations were carried out using simple linear regressions models using the Brazilian gross domestic product (GDP) as explanatory variable to prices and vacancy rates dependent ones.FindingsThe authors have found that the vacant space can be fully re-occupied in the beginning of 2021 or mid of 2022, according to the GDP growth rate, and, from this moment on, the demand for new spaces may grow, and, moreover around 2019, investments may become attractive again in this market.Originality/valueThis paper offers an alternative approach for estimating office building scenarios, especially when the database of the market is scarce. It also permits to evaluate an investment strategy for emerging markets within next years, particularly in São Paulo, Brazil.
Journal of Financial Management of Property and Construction – Emerald Publishing
Published: Aug 7, 2017