Pub Date : 2020-10-14DOI: 10.1108/jpif-06-2020-0072
Mengmeng Dou, Lesley Hemphill, L. Lim
PurposeThe paper aims to quantitatively investigate vacant industrial land valuation accuracy in China, given the importance of the industrial market as an underlying pillar to promote urban growth especially in emerging economies.Design/methodology/approachIn China, the government formulates a Land Benchmark Price (LBP) to serve as a price reference point to sell land rights. To gain an in-depth understanding of the valuation practice by LBP, this paper uses correlation analysis to investigate the varying dynamics between the transaction-based prices and LBP appraisal-based estimates. Furthermore, a margin of error examination investigates the distortion in LBP land appraisals, with an amended LBP presented to improve the accuracy of the current LBP method.FindingsDifferent influencing factors are identified to impact the actual market transaction prices and the LBP construction, leading to a large discrepancy in industrial land appraisals. A systematic problem is recognised that the construction of the LBP follows urban bid curve theory, whereas the land transaction prices do not, demonstrating that an urgent LBP update is needed to capture the market dynamics for industrial market.Practical implicationsThe paper sets out discrepancies in valuation accuracy surrounding the application of the LBP valuation approach in China. This has practical implications for valuers in terms of raising their awareness of the deficiencies in the approach and the pitfalls they need to guard against in their appraisals. It also has implications for developers and investors who rely on valuer appraisals to assess the viability of land purchases; hence, they need to express caution in the appraisal advice sought. Finally, the results demonstrate to the standard setters how they need to modify the LBP equations to better capture market dynamics.Originality/valueThe paper examines valuation accuracy in transitional economies, through valuation differentials between appraised price and the transacted price. The value of the work lies in the analysis of the fundamental differentials between market price and appraised value, which is of importance to investors/developers, practicing valuers, as well as government officials responsible for setting the valuation standards.
{"title":"Development land valuation accuracy in China – a case study of Beijing","authors":"Mengmeng Dou, Lesley Hemphill, L. Lim","doi":"10.1108/jpif-06-2020-0072","DOIUrl":"https://doi.org/10.1108/jpif-06-2020-0072","url":null,"abstract":"PurposeThe paper aims to quantitatively investigate vacant industrial land valuation accuracy in China, given the importance of the industrial market as an underlying pillar to promote urban growth especially in emerging economies.Design/methodology/approachIn China, the government formulates a Land Benchmark Price (LBP) to serve as a price reference point to sell land rights. To gain an in-depth understanding of the valuation practice by LBP, this paper uses correlation analysis to investigate the varying dynamics between the transaction-based prices and LBP appraisal-based estimates. Furthermore, a margin of error examination investigates the distortion in LBP land appraisals, with an amended LBP presented to improve the accuracy of the current LBP method.FindingsDifferent influencing factors are identified to impact the actual market transaction prices and the LBP construction, leading to a large discrepancy in industrial land appraisals. A systematic problem is recognised that the construction of the LBP follows urban bid curve theory, whereas the land transaction prices do not, demonstrating that an urgent LBP update is needed to capture the market dynamics for industrial market.Practical implicationsThe paper sets out discrepancies in valuation accuracy surrounding the application of the LBP valuation approach in China. This has practical implications for valuers in terms of raising their awareness of the deficiencies in the approach and the pitfalls they need to guard against in their appraisals. It also has implications for developers and investors who rely on valuer appraisals to assess the viability of land purchases; hence, they need to express caution in the appraisal advice sought. Finally, the results demonstrate to the standard setters how they need to modify the LBP equations to better capture market dynamics.Originality/valueThe paper examines valuation accuracy in transitional economies, through valuation differentials between appraised price and the transacted price. The value of the work lies in the analysis of the fundamental differentials between market price and appraised value, which is of importance to investors/developers, practicing valuers, as well as government officials responsible for setting the valuation standards.","PeriodicalId":46429,"journal":{"name":"Journal of Property Investment & Finance","volume":" ","pages":""},"PeriodicalIF":1.3,"publicationDate":"2020-10-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/jpif-06-2020-0072","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41620114","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-10-09DOI: 10.1108/jpif-07-2020-0087
Brano Glumac, F. D. Rosiers
PurposeAutomated valuation models have been in use at least for the last 50 years in both academia and practice, while automated valuation recently re-emerged as very important with the rise of digital infrastructure. The current state of the art, therefore, justifies the dual contributions of this paper: organising existing knowledge and providing a new framework.Design/methodology/approachThis paper provides much-needed analysis and synthesis of the accumulated body of knowledge by proposing an updated classification of automated valuation approaches based on two criteria, and a taxonomy adapted to new trends. The latter requires a paradigm shift from models to automated valuation systems. Both classification and taxonomy arose after literature review.FindingsThis paper provides a framework for an explicit context under which automated valuation is carried out. To do so, authors propose a definition of automation valuation systems; contextualise the differences among theories, approaches, methods, models and systems present in automated valuation and introduce a classification of automated valuation approaches and a non-hierarchical taxonomy of automated valuation systems.Research limitations/implicationsPerhaps, a systematic literature review process instead of a selective list of 100 references could additionally validate the proposed classification and taxonomy.Practical implicationsThe new framework, underlying various dimensions of the automated valuation process, can help practitioners surpass judging models based purely on their predictive accuracy. Also, the automated valuation system is a more generic term that can better accommodate future research coming from a multitude of disciplines, more diverse business areas and enlarged variety of practical users.Originality/valueThis is the first paper that develops a taxonomy of automated valuation systems.
{"title":"Towards a taxonomy for real estate and land automated valuation systems","authors":"Brano Glumac, F. D. Rosiers","doi":"10.1108/jpif-07-2020-0087","DOIUrl":"https://doi.org/10.1108/jpif-07-2020-0087","url":null,"abstract":"PurposeAutomated valuation models have been in use at least for the last 50 years in both academia and practice, while automated valuation recently re-emerged as very important with the rise of digital infrastructure. The current state of the art, therefore, justifies the dual contributions of this paper: organising existing knowledge and providing a new framework.Design/methodology/approachThis paper provides much-needed analysis and synthesis of the accumulated body of knowledge by proposing an updated classification of automated valuation approaches based on two criteria, and a taxonomy adapted to new trends. The latter requires a paradigm shift from models to automated valuation systems. Both classification and taxonomy arose after literature review.FindingsThis paper provides a framework for an explicit context under which automated valuation is carried out. To do so, authors propose a definition of automation valuation systems; contextualise the differences among theories, approaches, methods, models and systems present in automated valuation and introduce a classification of automated valuation approaches and a non-hierarchical taxonomy of automated valuation systems.Research limitations/implicationsPerhaps, a systematic literature review process instead of a selective list of 100 references could additionally validate the proposed classification and taxonomy.Practical implicationsThe new framework, underlying various dimensions of the automated valuation process, can help practitioners surpass judging models based purely on their predictive accuracy. Also, the automated valuation system is a more generic term that can better accommodate future research coming from a multitude of disciplines, more diverse business areas and enlarged variety of practical users.Originality/valueThis is the first paper that develops a taxonomy of automated valuation systems.","PeriodicalId":46429,"journal":{"name":"Journal of Property Investment & Finance","volume":" ","pages":""},"PeriodicalIF":1.3,"publicationDate":"2020-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/jpif-07-2020-0087","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47164334","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-09-29DOI: 10.1108/JPIF-07-2020-0086
Brano Glumac, F. D. Rosiers
PurposeThe current state-of-the-art recognises three traditional valuation approaches. The current division is not sufficient to explain systematically all features that drive the development and usage of automated valuation models.Design/methodology/approachThis practice briefing reviews existing valuation approaches, their pros and cons and more critical other automated valuation aspects or features; both based on a literature review.FindingsThis paper discusses and lists the six critical aspects or features, besides the valuation approaches.Practical implicationsThis paper reveals the list of aspects or features that are important to consider when designing an automated valuation model.Originality/valueThis practice briefing discusses the inclusion of a multitude of aspects when considering an automated valuation model design.
{"title":"Practice briefing – Automated valuation models (AVMs): their role, their advantages and their limitations","authors":"Brano Glumac, F. D. Rosiers","doi":"10.1108/JPIF-07-2020-0086","DOIUrl":"https://doi.org/10.1108/JPIF-07-2020-0086","url":null,"abstract":"PurposeThe current state-of-the-art recognises three traditional valuation approaches. The current division is not sufficient to explain systematically all features that drive the development and usage of automated valuation models.Design/methodology/approachThis practice briefing reviews existing valuation approaches, their pros and cons and more critical other automated valuation aspects or features; both based on a literature review.FindingsThis paper discusses and lists the six critical aspects or features, besides the valuation approaches.Practical implicationsThis paper reveals the list of aspects or features that are important to consider when designing an automated valuation model.Originality/valueThis practice briefing discusses the inclusion of a multitude of aspects when considering an automated valuation model design.","PeriodicalId":46429,"journal":{"name":"Journal of Property Investment & Finance","volume":" ","pages":""},"PeriodicalIF":1.3,"publicationDate":"2020-09-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/JPIF-07-2020-0086","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47679229","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-09-18DOI: 10.1108/JPIF-06-2020-0068
Elaine Worzala
Purpose: This paper examines the current uncertainty within real estate markets through the quotes of Dr James A Graaskamp, a real estate educator and researcher Graaskamp focused his teachings on real estate investment through the lens of risk management and risk mitigation Using the current COVID 19 pandemic crisis as the backdrop, the author examines how we might learn from Graaskamp to look differently at real estate investments during these uncertain times when an external shock shakes a market, causing transactions to stall and sometimes freeze In addition, she explores how we might learn from today's situation and make long-term changes to our built environment to have a better understanding of the risks associated with the current but also future pandemics and other uncertainties including natural disasters or climate change The quotes were gathered by Jim Curtis, a student, friend and colleague of Dr Graaskamp from the late 1970s until his death in 1988 Through these quotes, the author explores the many facets of the complex nature of the real estate asset class particularly during these very uncertain times created by the global pandemic Design/methodology/approach: This is a thought piece on the current uncertainty surrounding real estate markets around the globe caused by the COVID 19 pandemic The author of this essay was also a student, friend and mentee of Jim Graaskamp's, so it is an oral history of her experiences with this well-known and iconic real estate educator and scholar Findings: As a discussion piece, this is not a traditional research project with empirical findings It is an exploration of the current uncertain times caused by the COVID 19 pandemic and its impact on real estate markets The author examines how the increased risk is currently, and will also continue to, significantly influence the fields of property investment and finance Practical implications: The James A Graaskamp Collection on Teaching Materials compiled by the Wisconsin Real Estate Alumni Association is not a widely recognized resource for real estate scholars and practitioners yet the two CDs contain a wealth of information and knowledge from an intelligent real estate expert Used as the base for the discussion, this paper sheds light on the teachings and writings of Dr Graaskamp It illustrates the usefulness of the materials for other researchers and educators In particular, it highlights Graaskamp focus on risk management and mitigation which he strongly believed were essential skills to understanding the complicated nature of a real estate investment and for making good investment decisions, particularly when markets are full of uncertainty as is the case during these current times of the global COVID 19 pandemic Originality/value: As one of only a handful of living and still practicing doctoral students of Professor Graaskamp, the author has a unique perspective and lens to attempt to interpret the quotes of this real estate expert He was a leade
{"title":"COVID 19, real estate and uncertainty: examining this new “normal” through the quotes of Jim Graaskamp","authors":"Elaine Worzala","doi":"10.1108/JPIF-06-2020-0068","DOIUrl":"https://doi.org/10.1108/JPIF-06-2020-0068","url":null,"abstract":"Purpose: This paper examines the current uncertainty within real estate markets through the quotes of Dr James A Graaskamp, a real estate educator and researcher Graaskamp focused his teachings on real estate investment through the lens of risk management and risk mitigation Using the current COVID 19 pandemic crisis as the backdrop, the author examines how we might learn from Graaskamp to look differently at real estate investments during these uncertain times when an external shock shakes a market, causing transactions to stall and sometimes freeze In addition, she explores how we might learn from today's situation and make long-term changes to our built environment to have a better understanding of the risks associated with the current but also future pandemics and other uncertainties including natural disasters or climate change The quotes were gathered by Jim Curtis, a student, friend and colleague of Dr Graaskamp from the late 1970s until his death in 1988 Through these quotes, the author explores the many facets of the complex nature of the real estate asset class particularly during these very uncertain times created by the global pandemic Design/methodology/approach: This is a thought piece on the current uncertainty surrounding real estate markets around the globe caused by the COVID 19 pandemic The author of this essay was also a student, friend and mentee of Jim Graaskamp's, so it is an oral history of her experiences with this well-known and iconic real estate educator and scholar Findings: As a discussion piece, this is not a traditional research project with empirical findings It is an exploration of the current uncertain times caused by the COVID 19 pandemic and its impact on real estate markets The author examines how the increased risk is currently, and will also continue to, significantly influence the fields of property investment and finance Practical implications: The James A Graaskamp Collection on Teaching Materials compiled by the Wisconsin Real Estate Alumni Association is not a widely recognized resource for real estate scholars and practitioners yet the two CDs contain a wealth of information and knowledge from an intelligent real estate expert Used as the base for the discussion, this paper sheds light on the teachings and writings of Dr Graaskamp It illustrates the usefulness of the materials for other researchers and educators In particular, it highlights Graaskamp focus on risk management and mitigation which he strongly believed were essential skills to understanding the complicated nature of a real estate investment and for making good investment decisions, particularly when markets are full of uncertainty as is the case during these current times of the global COVID 19 pandemic Originality/value: As one of only a handful of living and still practicing doctoral students of Professor Graaskamp, the author has a unique perspective and lens to attempt to interpret the quotes of this real estate expert He was a leade","PeriodicalId":46429,"journal":{"name":"Journal of Property Investment & Finance","volume":"1 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2020-09-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/JPIF-06-2020-0068","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41343414","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-09-04DOI: 10.1108/jpif-05-2020-0048
M. Marzuki, G. Newell
PurposeMexico REITs are a significant and important REIT market, both in a regional and in emerging property market context. As one of the few emerging economies in the world with an active REIT market, Mexico REITs are specifically designed to provide an effective pathway to participate in the investment opportunities offered by the Mexico commercial property market for both domestic and international investors. Importantly, Mexico REITs provide additional property investment benefits such as a high degree of transparency, governance and liquidity. The main focus of this research is to highlight the significance of Mexico REITs and assess their performance dynamics, as well as the added-value benefits of Mexico REITs in mixed-asset investment portfolios.Design/methodology/approachUsing monthly total returns, the risk-adjusted performance and portfolio diversification potential of Mexico REITs over April 2011–December 2019 were assessed. A constrained mean-variance portfolio optimisation framework was used to develop a three-asset portfolio scenario using the historical returns, risk and correlation of Mexico REITs and the other two major financial assets.FindingsDespite being more volatile than the mainstream asset classes, Mexico REITs delivered the strongest risk-adjusted performance versus stocks and bonds over April 2011–December 2019, which was made possible by the high premium of their total return performance. Notably, Mexico REITs offered excellent diversification potential with bonds, whilst demonstrating a marginal positive correlation with the stock market. These investment attributes of Mexico REITs have brought immediate benefits towards their ability to add value to the Mexico mixed-asset portfolio fabric across a wide portfolio risk–return spectrum.Practical implicationsWhilst their initial establishment in 2004 was considered unsuccessful, the ongoing regulatory improvements have been pivotal in providing a supportive investment environment to nurture the organic growth of Mexico REITs. This now sees the Mexico REIT market as an exemplar of success for REIT establishments amongst its peers in the Latin American region, as well as for emerging economies worldwide. Mexico REITs are now an important REIT market, as the second largest emerging REIT market in the world. The empirical investigation of this research has established the investment attributes of Mexico REITs as a listed property investment vehicle. The strong risk-adjusted performance of Mexico REITs compared to stocks and bonds sees Mexico REITs contributing to the mixed-asset portfolio across the portfolio risk–return spectrum. This is particularly important as it provides insights into the broader strategic implications of Mexico REITs as an effective, transparent and tax-efficient conduit for high-quality Latin American property exposure in a liquid format.Originality/valueThis paper is the first published empirical research that elucidates the investment attributes o
{"title":"The investment attributes of Mexico REITs as a listed property investment vehicle","authors":"M. Marzuki, G. Newell","doi":"10.1108/jpif-05-2020-0048","DOIUrl":"https://doi.org/10.1108/jpif-05-2020-0048","url":null,"abstract":"PurposeMexico REITs are a significant and important REIT market, both in a regional and in emerging property market context. As one of the few emerging economies in the world with an active REIT market, Mexico REITs are specifically designed to provide an effective pathway to participate in the investment opportunities offered by the Mexico commercial property market for both domestic and international investors. Importantly, Mexico REITs provide additional property investment benefits such as a high degree of transparency, governance and liquidity. The main focus of this research is to highlight the significance of Mexico REITs and assess their performance dynamics, as well as the added-value benefits of Mexico REITs in mixed-asset investment portfolios.Design/methodology/approachUsing monthly total returns, the risk-adjusted performance and portfolio diversification potential of Mexico REITs over April 2011–December 2019 were assessed. A constrained mean-variance portfolio optimisation framework was used to develop a three-asset portfolio scenario using the historical returns, risk and correlation of Mexico REITs and the other two major financial assets.FindingsDespite being more volatile than the mainstream asset classes, Mexico REITs delivered the strongest risk-adjusted performance versus stocks and bonds over April 2011–December 2019, which was made possible by the high premium of their total return performance. Notably, Mexico REITs offered excellent diversification potential with bonds, whilst demonstrating a marginal positive correlation with the stock market. These investment attributes of Mexico REITs have brought immediate benefits towards their ability to add value to the Mexico mixed-asset portfolio fabric across a wide portfolio risk–return spectrum.Practical implicationsWhilst their initial establishment in 2004 was considered unsuccessful, the ongoing regulatory improvements have been pivotal in providing a supportive investment environment to nurture the organic growth of Mexico REITs. This now sees the Mexico REIT market as an exemplar of success for REIT establishments amongst its peers in the Latin American region, as well as for emerging economies worldwide. Mexico REITs are now an important REIT market, as the second largest emerging REIT market in the world. The empirical investigation of this research has established the investment attributes of Mexico REITs as a listed property investment vehicle. The strong risk-adjusted performance of Mexico REITs compared to stocks and bonds sees Mexico REITs contributing to the mixed-asset portfolio across the portfolio risk–return spectrum. This is particularly important as it provides insights into the broader strategic implications of Mexico REITs as an effective, transparent and tax-efficient conduit for high-quality Latin American property exposure in a liquid format.Originality/valueThis paper is the first published empirical research that elucidates the investment attributes o","PeriodicalId":46429,"journal":{"name":"Journal of Property Investment & Finance","volume":" ","pages":""},"PeriodicalIF":1.3,"publicationDate":"2020-09-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/jpif-05-2020-0048","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42104587","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-08-27DOI: 10.1108/jpif-05-2020-0061
W. Wong
Purpose – The purpose of this paper is to examine the impact of conversion to REIT status by former listed property companies in the United Kingdom on the level of institutional ownership during the period of 2007–2016. Design/methodology/approach – This paper uses an event study framework to track the change in institutional ownership three years before and after a REIT conversion event. This event study approach circumvents the sample selection bias issue associated with the conversion event wherein the decision to convert to REIT is likely to be endogenous. Findings – Panel regression analysis reveals that changing to REIT status led to a 12.8 and 15.2% increase in institutional ownership and number of institutional investors, respectively. The first order of priority in institutional investors’ investment in REIT shares is their preference for liquidity. Further analysis shows that institutional investors changed their preferences towards characteristics associated with systematic risk, firm age and liquidity after the conversion event by becoming less averse to firm-specific risk, placing more emphasis on firm age and less emphasis on systematic risk and liquidity. Practical implications – Overall, conversion to REIT status helps increase former property companies’ investor base, which is in line with the regulator’s aim to open up the property market to a wide range of investors through the introduction of a REIT regime. Findings from this paper also have policy implications for countries that are considering a REIT regime for their capital market and existing REIT regimes without a formal conversion mechanism. Originality/value – This paper offers, for the first time, evidence on 1) how conversion to REITs influences firms’ institutional ownership and 2) the determinants of converted REITs’ institutional ownership.
{"title":"UK REIT conversion and institutional ownership dynamic","authors":"W. Wong","doi":"10.1108/jpif-05-2020-0061","DOIUrl":"https://doi.org/10.1108/jpif-05-2020-0061","url":null,"abstract":"Purpose – The purpose of this paper is to examine the impact of conversion to REIT status by former listed property companies in the United Kingdom on the level of institutional ownership during the period of 2007–2016. Design/methodology/approach – This paper uses an event study framework to track the change in institutional ownership three years before and after a REIT conversion event. This event study approach circumvents the sample selection bias issue associated with the conversion event wherein the decision to convert to REIT is likely to be endogenous. Findings – Panel regression analysis reveals that changing to REIT status led to a 12.8 and 15.2% increase in institutional ownership and number of institutional investors, respectively. The first order of priority in institutional investors’ investment in REIT shares is their preference for liquidity. Further analysis shows that institutional investors changed their preferences towards characteristics associated with systematic risk, firm age and liquidity after the conversion event by becoming less averse to firm-specific risk, placing more emphasis on firm age and less emphasis on systematic risk and liquidity. Practical implications – Overall, conversion to REIT status helps increase former property companies’ investor base, which is in line with the regulator’s aim to open up the property market to a wide range of investors through the introduction of a REIT regime. Findings from this paper also have policy implications for countries that are considering a REIT regime for their capital market and existing REIT regimes without a formal conversion mechanism. Originality/value – This paper offers, for the first time, evidence on 1) how conversion to REITs influences firms’ institutional ownership and 2) the determinants of converted REITs’ institutional ownership.","PeriodicalId":46429,"journal":{"name":"Journal of Property Investment & Finance","volume":" ","pages":""},"PeriodicalIF":1.3,"publicationDate":"2020-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/jpif-05-2020-0061","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44112765","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-08-25DOI: 10.1108/jpif-03-2020-0030
M. Haran, D. Lo, M. McCord, P. Davis, L. Lim
PurposeThe purpose of this paper is to test the extent to which company-specific attributes including market capitalisation, capital structure and investment focus impact upon the performance of European listed real estate companies. Enhanced understanding of firm-level performance drivers is important for investors in order to diversify their investment portfolios and to mitigate company-specific risks at different points in the real estate cycle.Design/methodology/approachThe study centres on six key listed European real estate markets selected on the basis of market capitalisation, diversity, transparency and maturity. A series of statistical tests are undertaken using EPRA and Bloomberg data for the period of 2007–2017 using 113 listed property companies, all of whom were contemporaneous constituents of EPRA indices in this period. A series of customised performance indices were constructed to evaluate firm-level performance attributes.FindingsFirm-level attributes collectively account for more variation of risk-adjusted return than sector-level attributes over the investigation period. The impact of firm-specific attributes on performance varies significantly from country to country attributable to the contrasting cyclical property market trends in the pre– and post–Global Financial Crisis period. REITs outperformed non-REITs on a risk-adjusted basis attributed to the strong performance of “niche” market entrants allied with stronger regulatory structure. Finally, the findings showcase that sector specialist firms outperform diversified companies inferring that investors should seek to attain diversification through portfolio-based approaches rather than firm-level strategies.Practical implicationsThe results have implications for real estate companies aiming to raise capital internally for growth as higher return on equity in general signals reduced cost of capital. Secondly, the findings should be of practical use to multinationals specialising in international real estate trading in designing their business plans in general and formulating cross-country investment strategies in particular. Last but not least, a more refined conceptualisation of corporate-level performance drivers should complement existing professional practices in relation to business/company appraisal.Originality/valueThe research integrates EPRA and Bloomberg data sets to create a series of bespoke index constructs to measure the impact of firm-specific attributes on European listed real estate companies. Additionally, the authors construct a Herfindahl Index (H.I.) to further the debate on the impacts of diversification within the listed real estate sector. This serves to further heighten investor understanding of investment allocation and portfolio optimisation strategies for the listed real estate sector given the increasingly diverse range of investment opportunities within emerging sub-markets.
{"title":"Impact of firm-level attributes on listed real estate company performance","authors":"M. Haran, D. Lo, M. McCord, P. Davis, L. Lim","doi":"10.1108/jpif-03-2020-0030","DOIUrl":"https://doi.org/10.1108/jpif-03-2020-0030","url":null,"abstract":"PurposeThe purpose of this paper is to test the extent to which company-specific attributes including market capitalisation, capital structure and investment focus impact upon the performance of European listed real estate companies. Enhanced understanding of firm-level performance drivers is important for investors in order to diversify their investment portfolios and to mitigate company-specific risks at different points in the real estate cycle.Design/methodology/approachThe study centres on six key listed European real estate markets selected on the basis of market capitalisation, diversity, transparency and maturity. A series of statistical tests are undertaken using EPRA and Bloomberg data for the period of 2007–2017 using 113 listed property companies, all of whom were contemporaneous constituents of EPRA indices in this period. A series of customised performance indices were constructed to evaluate firm-level performance attributes.FindingsFirm-level attributes collectively account for more variation of risk-adjusted return than sector-level attributes over the investigation period. The impact of firm-specific attributes on performance varies significantly from country to country attributable to the contrasting cyclical property market trends in the pre– and post–Global Financial Crisis period. REITs outperformed non-REITs on a risk-adjusted basis attributed to the strong performance of “niche” market entrants allied with stronger regulatory structure. Finally, the findings showcase that sector specialist firms outperform diversified companies inferring that investors should seek to attain diversification through portfolio-based approaches rather than firm-level strategies.Practical implicationsThe results have implications for real estate companies aiming to raise capital internally for growth as higher return on equity in general signals reduced cost of capital. Secondly, the findings should be of practical use to multinationals specialising in international real estate trading in designing their business plans in general and formulating cross-country investment strategies in particular. Last but not least, a more refined conceptualisation of corporate-level performance drivers should complement existing professional practices in relation to business/company appraisal.Originality/valueThe research integrates EPRA and Bloomberg data sets to create a series of bespoke index constructs to measure the impact of firm-specific attributes on European listed real estate companies. Additionally, the authors construct a Herfindahl Index (H.I.) to further the debate on the impacts of diversification within the listed real estate sector. This serves to further heighten investor understanding of investment allocation and portfolio optimisation strategies for the listed real estate sector given the increasingly diverse range of investment opportunities within emerging sub-markets.","PeriodicalId":46429,"journal":{"name":"Journal of Property Investment & Finance","volume":" ","pages":""},"PeriodicalIF":1.3,"publicationDate":"2020-08-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/jpif-03-2020-0030","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42102143","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-08-18DOI: 10.1108/jpif-06-2020-0062
D. Parker
PurposeThe study aims to comment upon the state of property education in Australia.Design/methodology/approachStatement of opinionFindingsProperty education in Australia is heading down a one-way dead-end roadResearch limitations/implicationsThis article is a statement of opinionPractical implicationsHighlights alternative forms of delivery for property education in AustraliaSocial implicationsConsiders property education delivery in context of current social environmentOriginality/valueStatement of opinion based in experience in academia and practice
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