We empirically investigate whether China’s anticorruption campaign directly affected government and party officials’ economic behavior, under the premise that they more likely own or afford luxury condos. Using condo sales from 2012 to 2018 in Beijing, we find that luxury condos commanded higher prices compared with ordinary condos before the anticorruption announcement in December 2012, which we call the luxury premium. However, the luxury premium decreased and became a discount after the anticorruption announcement. Furthermore, the decrease in the luxury premium was more pronounced in two districts where officials more likely reside. Using time windows before and after each of the 11 rounds of travelling inspections in our sample period after the anticorruption announcement, we also find that the luxury premium decreased after each inspection, and decreased more in the two “government districts”. We then identify subdivisions developed on land lots with unusually low land sale prices, which we assume more likely involved corruption in land sales and thus luxury condos there are more likely owned by corrupt officials. We find that the decrease in the luxury premium is more significant in these shady subdivisions. All these results are consistent with the notion that the anticorruption campaign affects officials’ demand for luxury condos.

Real estate developers face significant risks in managing new developments, and presale contracts are commonly used to shift these risks to buyers. We develop a theoretical model to show that presale prices are an increasing function of time and that earlier presales are associated with greater discounts, reflecting the tradeoff between risk sharing benefits and presale prices. Using comprehensive presale transaction data in Hong Kong, we find an upward-sloping presale price-time relationship. This relationship is stronger for developers with weaker financial conditions and concentrated businesses in Hong Kong, as well as for listed developers. We also find that the Hong Kong government's cooling intervention decreases the presale price-time sensitivity. Our study contributes to the literature on risk sharing in real estate development by providing new insights into the dynamics of presale prices and their implications for developers and policymakers.

Appraisers use comparable sales to estimate the market value of real property. They use sales of comparable properties to perform that valuation but must make adjustments to these comparables that are based on the differences in

attributes between them and the subject property. These adjustments should in theory be equivalent to the market’s valuation of these attributes. We develop a simple econometric model to test whether this is the case.