The Efficiency of Property Market.pptx - The Efficiency of...

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The Efficiency of Property Market
IntroductionThe value of an asset is a reflection of both thequantity and quality of available information.The prices at which asset sell are on average afair reflection of their true value.It is difficult to discover assets that areconsistently mispriced.An efficient market is also important fordeveloping a framework fro asset allocation andperformance measurement.
The Efficiency of the Property MarketA market is said to be efficient if prices reflectall known information.If valuations are a good proxy for prices, thevaluation should reflect all known information.For property market to operate efficiently, allavailable information must be impounded intovaluation.
As long as the market is in equilibrium, valuationsappear to be a good proxy for prices.There is a common belief among professionalvaluers that the property market is grosslyinefficient.They argued that property has a number ofcharacteristics that prevent it from being valuedor priced in an efficient manner,For example:
Property is lumpyUnable to break it into smaller unitsDifficult to sell it – disposal of property unit take time tomaterialise, liquidity issue.

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Term
Summer
Professor
Prof. Lizam
Tags
Active management, Efficient market hypothesis, Property Valuation Model

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