Roads and railways in Sweden are mainly financed with national government taxes. However, the regional distribution of benefits differs widely from that of tax payments. As a consequence, overspending is likely to occur. A condition for efficiency is that the collective of users should pay for such projects. Therefore, we propose a new regional order for financing projects: government expenditures for transportation projects should be transferred to regions as well as the real estate tax to finance them. We present estimates of the size of such expenditures and of the income from real estate taxes following decentralization to regions.

This paper investigates the relation between the term structure of rents and future spot rents. A rich database of office rental agreements for various maturities is used to estimate the term structure of rents, and from this structure implicit forward rents are extracted. The data pertain to commercial properties in the three largest Swedish cities for the period 1998-2002. A positive relation between forward and spot rents is found in some regions, but forward rents underestimate future rent levels. Another contribution of the paper lies in the area of rental index construction. We provide evidence that rental indices should not only be quality constant (i.e., control for characteristics), but should also be maturity constant.

This study investigates the determinants of key input variables in valuers' discounted cash flow models used for estimating market values for offices. Data from 599 valuations in 2000 from Stockholm, Gothenburg and Malmo are used to explain variation in discount rates, expected growth rates in net operating income and exit cap rates. Our ability to explain the relatively wide variation in appraisal assumptions with plausible covariates generates confidence in the appraisal process. This has important implications because most value and returns indices of commercial real estate worldwide are appraisal based.