Commercial Property Index Construction Methodology: A Review on Literature and Practice

Abstract

This paper reviews the literature on commercial property index construction methodology. Alongside
this, index construction methodology employed by various organizations in producing existing
commercial property indices is also discussed. The aim of the review is to identify the best possible
methodology option to adopt in developing Kuala Lumpur Office Price Index (KL - OPI). Among the
Asean countries, Singapore is the only country in this region that produces retail and office price
index. In the case of Malaysia, this is the first study of this nature in the country, which outcome
would be useful indicator for the industry. Having reviewed the existing methodologies of commercial
property indices, it is best to model KL-OPI by adopting the hedonic price method.

Keywords: appraisal-based, commercial property, hedonic, Kuala Lumpur, transaction-based