Can a Multinational Company Create a Real Estate “Bubble” at the Local Level? The Case of Fiat and City of Kragujevac / Mogućnost Stvaranja „Mehura” na Lokalnom Tržištu Nekretnina Usled Dolaska Multinacionalne Kompanije: Primer Fijata i Grada Kragujevca

• Authors: Nikola Makojević , Petar Veselinović , Ljubina Kalinić
• Languages of publication: EN

Abstracts

EN

The aim of the paper is to analyze the recent dramatic increase in housing prices in Kragujevac, related to the opening of a multinational company facility. The main question is whether increasing house prices have been driven by market fundamentals or by speculative behaviour of the market players. We have decomposed variables influencing house prices in Kragujevac into supply and demand driven fundamentals to explore speculative ‘bubbles’ and detected the evidence of irrationally exuberant investors (constructors and buyers). The findings show a lack of rational behaviour among market players, absence of fundamentaldriven influence on real estate prices and expectancy-driven prices. The main characteristic is a strong relationship between price and rental price with no significant change in price-rent ratio.

Keywords

EN

real estate market; fundamentals; price-rent ratio; irrational expectations; multinational company

• Publisher: Sciendo
• Journal: Economic Themes
• Year: 2015
• Volume: 53
• Issue: 4
• Pages: 519-534

Dates

published

2015-12-01

received

2015-02-10

accepted

2015-09-24

online

2016-04-15

Contributors

author

Nikola Makojević

• Faculty of Economics, University of Kragujevac, Serbia

author

Petar Veselinović

• Faculty of Economics, University of Kragujevac, Serbia

author

Ljubina Kalinić

• PhD Candidate, Faculty of Economics, University of Kragujevac, Serbia

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Identifiers

DOI

10.1515/ethemes-2015-0030