Assessing the real value in residential property investment

One of the major fall outs from the Global Financial Crisis has been the decline in residential property construction, home lending and residential property prices. This has lead to some extent to a reduction in the number of small investors willing to commit funds to an investment market that is not seen to perform as well as other investment assets, particularly in relation to income return.With a decreasing supply of rental accommodation in the housing markets, less public housing being constructed by both State and Commonwealth Governments, there is the potential for the residential property market to provide more substantial returns than previous years.This paper will analyse the current residential housing market in Brisbane, Australia to determine if there are sectors in this market that are outperforming the average income and total return for residential investment property and the variation in investment performance across the various housing sub-markets. The results show that property investment in residential property provides opportunities to maximize returns based on geographic location and socio-economic economic status, with lower value areas showing the highest income returns and higher value suburbs showing greater capital returns

Positive energy homes : impacts on, and implications for, ecologically sustainable design

A zero-energy home (ZEH) is a residential dwelling that generates as much energy annually from onsite renewable sources, as it consumes in its operation. A positive energy home (PEH) generates more energy than it consumes. The key design and construction elements, and costs and benefits of such buildings, are the subject of increasing research globally. Approaching this topic from the perspective of the role of such homes in the planning and development ‘supply chain’, this paper presents the measured outcomes of a PEH and discusses urban design implications. Using twelve months of detailed performance data of an occupied sub-tropical home, the paper analyses the design approach and performance outcomes that enable it to be classified as ‘positive energy’. Second, it analyses both the urban design strategies that assisted the house in achieving its positive energy status, and the impacts of such housing on urban design and infrastructure. Third, the triple bottom line implications are discussed from the viewpoint of both the individual household and the broader community. The paper concludes with recommendations for research areas required to further underpin and quantify the role of ZEHs and PEHs in enabling and supporting the economic, social and ecological sustainability of urban developments.

Construction of Francophone families’ health literacy in a linguistic minority situation

With the increase in international mobility, healthcare systems should no longer be ignoring language barriers. In addition to the benefit of reducing long‐term costs, immigrant‐friendly organizations should be concerned with mitigating the way language barriers increase individuals’ social vulnerabilities and inequities in health care and health status. This paper reports the findings of a qualitative, exploratory study of the health literacy of 28 Francophone families living in a linguistic‐minority situation in Canada. Analysis of interviews revealed that participants’ social vulnerability, mainly due to their limited social and informational networks, influenced the construction of family health literacy. Disparities in access to healthcare services could be decreased by having health professionals’ work in alliance with Francophone community groups and by hiring bilingual health professionals. Linguistic isolation and lack of knowledge about local cultural organizations among Francophone immigrants were two important findings of this study

Economic fluctuations and productivity in the Malaysian construction sector

Growth in productivity is the key determinant of the long-term health and prosperity of an economy. The construction industry being one of major strategic importance, its productivity performance has a significant effect on national economic growth. The relationship between construction output and economy has received intensive studies, but there is lack of empirical study on the relationship between construction productivity and economic fluctuations. Fluctuations in construction output are endemic in the industry. In part they are caused by the boom and slump of the economy as a whole and in part by the nature of the construction product. This research aims to uncover how the productivity of construction sector is influenced in the course of economic fluctuations in Malaysia. Malaysia has adopted three economic policies – New Economic Policy (1971-1990), National Development Policy (1991-2000) and the National Vision Policy (2001-2010) since gaining independence in 1959. The Privatisation Master Plan was introduced in 1991. Operating within this historical context, the Malaysian construction sector has experienced four business cycles since 1960. A mixed-method design approach is adopted in this study. Quantitative analysis was conducted on the published official statistics of the construction industry and the overall economy in Malaysia between 1970 and 2009. Qualitative study involved interviews with a purposive sample of 21 industrial participants. This study identified a 32-year long building cycle appears in 1975-2006. It is superimposed with three shorter construction business cycles in 1975-1987, 1987-1999 and 1999-2006. The correlations of Construction labour productivity (CLP) and GDP per capita are statistically significant for the 1975-2006 building cycle, 1987-1999 and 1999-2006 construction business cycles. It was not significant in 1975-1987 construction business cycles. The Construction Industry Surveys/Census over the period from 1996 to 2007 show that the average growth rate of total output per employee expanded but the added value per employee contracted which imply high cost of bought-in materials and services and inefficient usage of purchases. The construction labour productivity is peaked at 2004 although there is contraction of construction sector in 2004. The residential subsector performed relatively better than the other sub-sectors in most of the productivity indicators. Improvements are found in output per employee, value added per employee, labour competitiveness and capital investment but declines are recorded in value added content and capital productivity. The civil engineering construction is most productive in the labour productivity nevertheless relatively poorer in the capital productivity. The labour cost is more competitive in the larger size establishment. The added value per labour cost is higher in larger sized establishment attributed to efficient in utilization of capital. The interview with the industrial participant reveals that the productivity of the construction sector is influenced by the economic environment, the construction methods, contract arrangement, payment chain and regulatory policies. The fluctuations of construction demand have caused companies switched to defensive strategy during the economic downturn and to ensure short-term survival than to make a profit for the long-term survival and growth. It leads the company to take drastic measures to curb expenses, downsizing, employ contract employment, diversification and venture overseas market. There is no empirical evidence supports downsizing as a necessary step in a process of reviving productivity. The productivity does not correlate with size of firm. A relatively smaller and focused firm is more productive than the larger and diversified organisation. However diversified company experienced less fluctuation in both labour and capital productivity. In order to improve the productivity of the construction sector, it is necessary to remove the negatives and flaws from past practices. The recommended measures include long-term strategic planning and coordinated approaches of government agencies in planning of infrastructure development and to provide regulatory environments which encourage competition and facilitate productivity improvement.

Green buildings for greying people : a case study of a retirement village in Australia

Purpose With an increasingly ageing population and widespread acceptance of the need for sustainable development in Australia, the demand for green retirement villages is increasing. This paper aims to identify the critical issues to be considered by developers and practitioners when embarking on their first green residential retirement project in Australia. Design/methodology/approach In view of the lack of adequate historical data for quantitative analysis, a case study approach is employed to examine the successful delivery of green retirement villages. Face-to-face interviews and document analysis were conducted for data collection. Findings The findings of the study indicate that one of the major obstacles to the provision of affordable green retirement villages is the higher initial costs involved. However, positive aspects were identified, the most significant of which relate to: the innovative design of site and floor plans; adoption of thermally efficient building materials; orientation of windows; installation of water harvesting and recycling systems, water conservation fittings and appliances; and waste management during the construction stage. With the adoption of these measures, it is believed that sustainable retirement development can be achieved without significant additional capital costs. Practical implications The research findings serve as a guide for developers in decision making throughout the project life-cycle when introducing green features into the provision of affordable retirement accommodation. Originality/value This paper provides insights into the means by which affordable green residential retirement projects for aged people can be successfully completed.

An analysis of holding cost impact on housing affordability in relation to midsized Greenfield residential property developments in South East Queensland

The position of housing demand and supply is not consistent. The Australian situation counters the experience demonstrated in many other parts of the world in the aftermath of the Global Financial Crisis, with residential housing prices proving particularly resilient. A seemingly inexorable housing demand remains a critical issue affecting the socio-economic landscape. Underpinned by high levels of population growth fuelled by immigration, and further buoyed by sustained historically low interest rates, increasing income levels, and increased government assistance for first home buyers, this strong housing demand level ensures problems related to housing affordability continue almost unabated. A significant, but less visible factor impacting housing affordability relates to holding costs. Although only one contributor in the housing affordability matrix, the nature and extent of holding cost impact requires elucidation: for example, the computation and methodology behind the calculation of holding costs varies widely - and in some instances completely ignored. In addition, ambiguity exists in terms of the inclusion of various elements that comprise holding costs, thereby affecting the assessment of their relative contribution. Such anomalies may be explained by considering that assessment is conducted over time in an ever-changing environment. A strong relationship with opportunity cost - in turn dependant inter alia upon prevailing inflation and / or interest rates - adds further complexity. By extending research in the general area of housing affordability, this thesis seeks to provide a detailed investigation of those elements related to holding costs specifically in the context of midsized (i.e. between 15-200 lots) greenfield residential property developments in South East Queensland. With the dimensions of holding costs and their influence over housing affordability determined, the null hypothesis H0 that holding costs are not passed on can be addressed. Arriving at these conclusions involves the development of robust economic and econometric models which seek to clarify the componentry impacts of holding cost elements. An explanatory sequential design research methodology has been adopted, whereby the compilation and analysis of quantitative data and the development of an economic model is informed by the subsequent collection and analysis of primarily qualitative data derived from surveying development related organisations. Ultimately, there are significant policy implications in relation to the framework used in Australian jurisdictions that promote, retain, or otherwise maximise, the opportunities for affordable housing.

An analysis of construction productivity in Malaysia

The construction industry is an industry of major strategic importance. Its level of productivity has a significant effect on national economic growth. Productivity indicators are examined. The indicators consist of labour productivity, capital productivity, labour competitiveness, capital intensity and added value content of data, which are obtained from the published census/biannual surveys of the construction industry between the years 1999 and 2011 from the Department of Statistics of Malaysia. The results indicated that there is an improvement in the labour productivity, but the value-added content is declining. The civil engineering and special trades subsectors are more productive than the residential and non-residential subsectors in terms of labour productivity because machine-for-labour substitution is a more important process in those subsectors. The capital-intensive characteristics of civil engineering and special trade works enable these subsectors to achieve higher added value per labour cost but not the capital productivity. The added value per labour cost is lower in larger organizations despite higher capital productivity. However, the capital intensity is lower and unit labour cost is higher in the larger organizations.

Residential property investment : assessing home ownership long term viability

Home purchase and ownership is seen by the majority of Australians as the basis for a sound investment strategy and to seciure their long term retirement goals. Although home ownership rates in Australia are in excess of 65% of the population, there have been doubts raised as to the effectiveness of purchasing a house as the main source of retirement income. The main issue with this approach is that the house has to be sold to gain access to these funds or the owners have to take out a reverse mortgage to access the capital tied up in their home, which can be more expensive than selling. This paper will carryout a detailed analysis of a number of investment options to determine the effectiveness of home purchase as a long term investment vehicle. This study has found that the long term investment in equities or managed superannuation funds can provide a greater retirement income than the purchase of a residential property for owner occupation

Does residential dissonance impact residential mobility?

This research identifies residential mobility behaviour impacts of residential dissonance in Transit Oriented Developments (TODs) vs. non-TODs in Brisbane, Australia. Based on the characteristics of living environments (density, diversity, connectivity, and accessibility) and the travel preferences of 4545 individuals, respondents in 2009 were classified into one of four categories including: TOD consonants, TOD dissonants, non-TOD dissonants, and non-TOD consonants. Binary logistic regression analyses were employed to identify residential mobility behaviour of groups between 2009 and 2011; controlling for time varying covariates. The findings show that both TOD dissonants and TOD consonants move residences at an equal rate. However, TOD dissonants are more likely to move residences to their preferred non-TOD areas. In contrast, non-TOD dissonants not only moved residences at a lower rate, but their rate of mobility to their preferred TOD neighbourhood is also significantly lower due to costs and other associated factors. The findings suggest that discrete land use policy development is required to integrate non-TOD dissonant and TOD dissonant behaviours to support TOD development in Brisbane.

Whole life cycle costing for Malaysia high-rise residential building : a needs?

The continuous growth of high-rise residential properties indicates that there is a need for an effective property management system to provide a sustainable high-rise residential property development. As intensive as these studies are, they do not attempt to investigate the correlation between property management systems with the trends of Malaysia high-rise residential property development. By examining the trends and scenario of Malaysia high-rise residential property development, this paper aims to gain an understanding of impacts from the effectiveness of property management in this scope area. Findings from this scoping paper will assist in providing a greater understanding and possible solutions for the current Malaysian property management systems for the expanding high-rise residential unit market.

Earthworks planning for road construction projects : a case study

In this paper we construct earthwork allocation plans for a linear infrastructure road project. Fuel consumption metrics and an innovative block partitioning and modelling approach are applied to reduce costs. 2D and 3D variants of the problem were compared to see what effect, if any, occurs on solution quality. 3D variants were also considered to see what additional complexities and difficulties occur. The numerical investigation shows a significant improvement and a reduction in fuel consumption as theorised. The proposed solutions differ considerably from plans that were constructed for a distance based metric as commonly used in other approaches. Under certain conditions, 3D problem instances can be solved optimally as 2D problems.

Construction Prices : the Market Effect

Teachers of construction economics and estimating have for a long time recognised that there is more to construction pricing than detailed calculation of costs (to the contractor). We always get to the point where we have to say "of course, experience or familiarity of the market is very important and this needs judgement, intuition, etc". Quite how important is the matter in construction pricing is not known and we tend to trivialise its effect. If judgement of the market has a minimal effect, little harm would be done, but if it is really important then some quite serious consequences arise which go well beyond the teaching environment. Major areas of concern for the quantity surveyor are in cost modelling and cost planning - neither of which pay any significant attention to the market effect. There are currently two schools of thought about the market effect issue. The first school is prepared to ignore possible effects until more is known. This may be called the pragmatic school. The second school exists solely to criticise the first school. We will call this the antagonistic school. Neither the pragmatic nor the antagonistic schools seem to be particularly keen to resolve the issue one way or the other. The founder and leader of the antagonistic school is Brian Fine whose paper in 1974 is still the basic text on the subject, and in which he coined the term 'socially acceptable' price to describe what we now recognise as the market effect. Mr Fine's argument was then, and is since, that the uncertainty surrounding the contractors' costing and cost estimating process is such that the uncertainty surrounding the contractors' cost that it logically leads to a market-orientated pricing approach. Very little factual evidence, however, seems to be available to support these arguments in any conclusive manner. A further, and more important point for the pragmatic school, is that, even if the market effect is as important as Mr Fine believes, there are no indications of how it can be measured, evaluated or predicted. Since 1974 evidence has been accumulating which tends to reinforce the antagonists' view. A review of the literature covering both contractors' and designers' estimates found many references to the use of value judgements in construction pricing (Ashworth & Skitmore, 1985), which supports the antagonistic view in implying the existence of uncertainty overload. The most convincing evidence emerged quite by accident in some research we recently completed with practicing quantity surveyors in estimating accuracy (Skitmore, 1985). In addition to demonstrating that individual quantity surveyors and certain types of buildings had significant effect on estimating accuracy, one surprise result was that only a very small amount of information was used by the most expert surveyors for relatively very accurate estimates. Only the type and size of building, it seemed, was really relevant in determining accuracy. More detailed information about the buildings' specification, and even a sight to the drawings, did not significantly improve their accuracy level. This seemed to offer clear evidence that the constructional aspects of the project were largely irrelevant and that the expert surveyors were somehow tuning in to the market price of the building. The obvious next step is to feed our expert surveyors with more relevant 'market' information in order to assess its effect. The problem with this is that our experts do not seem able to verbalise their requirements in this respect - a common occurrence in research of this nature. The lack of research into the nature of market effects on prices also means the literature provides little of benefit. Hence the need for this study. It was felt that a clearer picture of the nature of construction markets would be obtained in an environment where free enterprise was a truly ideological force. For this reason, the United States of America was chosen for the next stage of our investigations. Several people were interviewed in an informal and unstructured manner to elicit their views on the action of market forces on construction prices. Although a small number of people were involved, they were thought to be reasonably representative of knowledge in construction pricing. They were also very well able to articulate their views. Our initial reaction to the interviews was that our USA subjects held very close views to those held in the UK. However, detailed analysis revealed the existence of remarkably clear and consistent insights that would not have been obtained in the UK. Further evidence was also obtained from literature relating to the subject and some of the interviewees very kindly expanded on their views in later postal correspondence. We have now analysed all the evidence received and, although a great deal is of an anecdotal nature, we feel that our findings enable at least the basic nature of the subject to be understood and that the factors and their interrelationships can now be examined more formally in relation to construction price levels. I must express my gratitude to the Royal Institution of Chartered Surveyors' Educational Trust and the University of Salford's Department of Civil Engineering for collectively funding this study. My sincere thanks also go to our American participants who freely gave their time and valuable knowledge to us in our enquiries. Finally, I must record my thanks to Tim and Anne for their remarkable ability to produce an intelligible typescript from my unintelligible writing.

Does residential dissonance impact residential mobility?

This research identifies residential mobility behaviour impacts of residential dissonance in Transit Oriented Developments (TODs) vs. non-TODs in Brisbane, Australia. Based on the characteristics of living environments (density, diversity, connectivity, and accessibility) and the travel preferences of 4545 individuals, respondents in 2009 were classified into one of four categories including: TOD consonants, TOD dissonants, non-TOD dissonants, and non-TOD consonants. Binary logistic regression analyses were employed to identify residential mobility behaviour of groups between 2009 and 2011; controlling for time varying covariates. The findings show that both TOD dissonants and TOD consonants move residences at an equal rate. However, TOD dissonants are more likely to move residences to their preferred non-TOD areas. In contrast, non-TOD dissonants not only moved residences at a lower rate, but their rate of mobility to their preferred TOD neighbourhood is also significantly lower due to costs and other associated factors. The findings suggest that discrete land use policy development is required to integrate non-TOD dissonant and TOD dissonant behaviours to support TOD development in Brisbane.

A dynamic approach for evaluating earthwork hauls in construction

A graph theoretic approach is developed for accurately computing haulage costs in earthwork projects. This is vital as haulage is a predominant factor in the real cost of earthworks. A variety of metrics can be used in our approach, but a fuel consumption proxy is recommended. This approach is novel as it considers the constantly changing terrain that results from cutting and filling activities and replaces inaccurate “static” calculations that have been used previously. The approach is also capable of efficiently correcting the violation of top down cutting and bottom up filling conditions that can be found in existing earthwork assignments and sequences. This approach assumes that the project site is partitioned into uniform blocks. A directed graph is then utilised to describe the terrain surface. This digraph is altered after each cut and fill, in order to reflect the true state of the terrain. A shortest path algorithm is successively applied to calculate the cost of each haul and these costs are summed to provide a total cost of haulage

Ten basic factors to identify suitable subcontractors for construction projects

With unpredictable workloads and a need for a multitude of specialized skills, many main contractors rely heavily on subcontracting to reduce their risks (Bresnen et al., 1985; Beardsworth et al., 1988). This is especially the case In Hong Kong, where the average direct labour content accounts for only around 1% of the total contract sum (Lai, 1987). Extensive usage of subcontracting is also reported in many other countries, including the UK (Gray and Flanagan, 1989) and Japan (Bennett et al., 1987). In addition, and depending upon the scale and complexity of works, it is not uncommon for subcontractors to further sublet their works to lower tier(s) subcontractors. Richter and Mitchell (1982) argued that main contractors can obtain a higher profit margin by reducing their performance costs by subcontracting work to those who have the necessary resources to perform the work more efficiently and economically. Subcontracting is also used strategically to allow firms to employ a minimum work force under fluctuating demand (Usdiken and Sözen, 1985). Through subcontracting, the risks of main contractors are also reduced, as errors in estimating or additional costs caused by delays or extra labour requirements can be absorbed by the subcontractors involved (Woon and Ofori, 2000). Despite these benefits, the quality of work can suffer when incapable or inexperienced subcontractors are employed. Additional problems also exist in the form of bid shopping, unclear accountability, and high fragmentation (Palaneeswaran et al., 2002). A recent CIB TG 23 International Conference, October 2003, Hong Kong report produced by the Hong Kong Construction Industry Review Committee (CIRC) points to development of a framework to help distinguish between capable and incapable subcontractors (Tang, 2001). This paper describes research aims at identifying and prioritising criteria for use in such a framework.