Characteristic points of Auckland commercial property cycles Moshe Szweizer CBRE Group Inc., Auckland, New Zealand Abstract Purpose – The purpose of this paper is to expand our understanding of processes governing commercial property cycles, and to provide tools, which enable identification of property cycles’ turning points’ location. Design/methodology/approach – This paper is divided into three parts. The first looks at the demand-supply dynamics and the location of two characteristic cyclic points, the market bottom and the cycle commencement. In the second part a property relevant formula for entropy is derived, and its relation to the cycle overheated stage and the market peak is studied. In the third part, we discuss still another characteristic point of the cycle, which relates to the stage when developers elect to undertake new projects. This analysis is done by employing the chaos theory, and its relation to the cyclic evolution. Findings – It is found that some markets cycle, while others fluctuate only. A clear method for distinguishing among these is provided. The bottom of a cycle may overlap or be time separated from the start of a subsequent cycle. Market peaks are characterised by a sharp decrease in financial component to entropy for top quality building grades. A cycling market is characterised by crossing of a distinct vacancy rate during the cycle progression. Practical implications – The tools developed in the paper allow for clear characterisation of the market types and their cyclic behaviour. This in turn allows for timely characterisation of the market state and for short time-frame forecasting. The depth of a cycle may be calculated and the subsequent correction level estimated. Originality/value – The paper utilises cross-field approach by taking methods from both physics and mathematics and applying them to property markets. It breaks new ground both in property research and in applied mathematics by showing how the current frontier in pure mathematics may be applied to property. Keywords Property cycles, Cycle turning points, Entropy, Chaos, Oversupply of space, Space competitiveness Paper type Research paper Introduction The purpose of this paper is two-fold. First, we would like to expand our understanding of processes governing commercial property cycles. Second, we would like to provide tools, which enable reasonably precise identification of property cycles’ turning points location. The work expands on the one done by Szweizer (2018, 2019), which compares a commercial property cycle to a process described in physics. We start with a short presentation of the cycle described in that work and provide a precise definition of cyclic processes as applicable to the commercial property markets. This paper is divided into three parts. The first looks at the difference between the accumulation of space supply and the accumulation of absorption during a cycle. This allows for the location of two characteristic cyclic points, namely the market bottom and the cycle commencement. The second part looks at entropy, and its relation to the cycle overheated stage and the market peak. Finally, in the third part, we discuss an additional characteristic point of the cycle by employing the chaos theory, and its relation to the cycle development. In this part, we find the point of inflexion, which relates to the stage when developers elect to undertake new projects. The topics entertained in this paper have a reputation for being of considerable complexity. Therefore, we intentionally present the discussion in an easily approachable manner. Literature review – property This work expands findings presented by Szweizer (2018) in relation to property markets being modelled through the techniques available in Physics. The assumed basic structure of Journal of Property Investment & Finance Vol. 37 No. 5, 2019 pp. 470-485 © Emerald Publishing Limited 1463-578X DOI 10.1108/JPIF-04-2019-0053 Received 12 April 2019 Accepted 14 May 2019 The current issue and full text archive of this journal is available on Emerald Insight at: www.emeraldinsight.com/1463-578X.htm 470 JPIF 37,5