2014-08-28Buch DOI: 10.18452/3235
Is there a Term Structure in Land Lease Rates?
This paper applies the concept of a term structure to agricultural land rental prices. Based on theoretical considerations, we develop a hedonic pricing model that allows for different shapes of the term structure curve while controlling for other price-relevant characteristics. We apply this model to land lease contracts in Saxony-Anhalt concluded between 2002 and 2010. We find an upward-sloping term structure at the beginning, that is, market participants expected increasing rental prices. For the subsequent years, however, we detect a singlehumped term structure. Hence, market participants revised their expectations and assumed a decline of land rental prices in the long-term.
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