Abstract

This paper empirically examines the macroeconomic factors that affect the rental rates and selling prices of office space. The data are in the form of quarterly time series which are used for the period of 1996: 1 to 2012: 4 period. In addition, quantitative methods in the form of Vector Error Correction Model (VECM) are also used in this study. The results showed that there is a long-term relationship between macroeconomic variables with the rental rate and selling prices of office space. IRF and FEVD showed that the rental rates and selling prices responded permanently to the shocks that occured on macroeconomic variables. Moreover, the rental rate is predominantly influenced by the rental rate followed by the service sector employment, the selling price, exchange rate, inflation, interest rates and economic growth. Conversely, the selling price is predominantly influenced by the rental rate followed by service sector employment, the exchange rate, economic growth, the selling price, infllation and interest rates. Investors and developers can use the results of this study as one of approaches of market analysis, especially for office market analysis.

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