Risk reduction and diversification in UK commercial property portfolios

The issue of diversification in direct real estate investment portfolios has been widely studied in academic and practitioner literature. Most work, however, has been done using either partially aggregated data or data for small samples of individual properties. This paper reports results from tests of both risk reduction and diversification that use the records of 10,000+ UK properties tracked by Investment Property Databank. It provides, for the first time, robust estimates of the diversification gains attainable given the returns, risks and cross‐correlations across the individual properties available to fund managers. The results quantify the number of assets and amount of money needed to construct both ‘balanced’ and ‘specialist’ property portfolios by direct investment. Target numbers will vary according to the objectives of investors and the degree to which tracking error is tolerated. The top‐level results are consistent with previous work, showing that a large measure of risk reduction can be achieved with portfolios of 30–50 properties, but full diversification of specific risk can only be achieved in very large portfolios. However, the paper extends previous work by demonstrating on a single, large dataset the implications of different methods of calculating risk reduction, and also by showing more disaggregated results relevant to the construction of specialist, sector‐focussed funds.

Insertion of a hydroxido bridge into a diphenoxido dinuclear copper(II) complex: drastic change of the magnetic property from strong antiferromagnetic to ferromagnetic and enhancement in the catecholase activity

A diphenoxido-bridged dinuclear copper(II) complex, [Cu2L2(ClO4)(2)] (1), has been synthesized using a tridentate reduced Schiff base ligand, 2-[[2-(diethylamino)-ethylamino]methyl]phenol (HL). The addition of triethylamine to the methanolic solution of this complex produced a novel triple bridged (double phenoxido and single hydroxido) dinuclear copper(II) complex, [Cu2L2(OH)]ClO4 (2). Both complexes 1 and 2 were characterized by X-ray structural analyses, variable-temperature magnetic susceptibility measurements, and spectroscopic methods. In 1, the two phenoxido bridges are equatorial-equatorial and the species shows strong antiferromagnetic coupling with J = -615.6(6.1) cm(-1). The inclusion of the equatorial-equatorial hydroxido bridge in 2 changes the Cu center dot center dot center dot Cu distance from 3.018 angstrom (avg.) to 2.798 angstrom (avg.), the positions of the phenoxido bridges to axial-equatorial, and the magnetic coupling to ferromagnetic with J = 50.1(1.4) cm(-1). Using 3,5-di-tert-butylcatechol as the substrate, the catecholase activity of the complexes has been studied in a methanol solution; compound 2 shows higher catecholase activity (k(cat) = 233.4 h(-1)) than compound 1 (k(cat) = 93.6 h(-1)). Both complexes generate identical species in solution, and they are interconvertible simply by changing the pH of their solutions. The higher catecholase activity of 2 seems to be due to the presence of the OH group, which increases the pH of its solution.

Fenced in: Common property struggles in the management of communal rangelands in central Eastern Cape Province, South Africa

This paper takes as its starting point the assertion that current rangeland management in the central Eastern Cape Province (former Ciskei) of South Africa, is characterised primarily by an ‘open access’ approach. Empirical material drawn from three case-study communities in the region is used to examine the main barriers to management of rangeland as a ‘commons’. The general inability to define and enforce rights to particular grazing resourses in the face of competing claims from ‘outsiders’, as well as inadequate local institutions responsible for rangeland management are highlighted as being of key importance. These are often exacerbated by lack of available grazing land, diffuse user groups and local political and ethnic divisions. Many of these problems have a strong legacy in historical apartheid policies such as forced resettlement and betterment planning. On this basis it is argued that policy should focus on facilitating the emergence of effective, local institutions for rangeland management. Given the limited grazing available to many communities in the region, a critical aspect of this will be finding ways to legitimise current patterns of extensive resource use, which traverse existing ‘community’ boundaries. However, this runs counter to recent legislation, which strongly links community management with legal ownership of land within strict boundaries often defined through fencing. Finding ways to overcome this apparent disjuncture between theory and policy will be vital for the effective management of common pool grazing resources in the region.

The distribution of London residential property prices and the role of spatial lock-in

Much of mainstream economic analysis assumes that markets adjust smoothly, through prices, to changes in economic conditions. However, this is not necessarily the case for local housing markets, whose spatial structures may exhibit persistence, so that conditions may not be those most suited to the requirements of modern-day living. Persistence can arise from the existence of transaction costs. The paper tests the proposition that housing markets in Inner London exhibit a degree of path dependence, through the construction of a three-equation model, and examines the impact of variables constructed for the 19th and early 20th centuries on modern house prices. These include 19th-century social structures, slum clearance programmes and the 1908 underground network. Each is found to be significant. The tests require the construction of novel historical datasets, which are also described in the paper.

Asymptotic behavior at infinity of solutions of multidimensional second kind integral equations

We consider second kind integral equations of the form x(s) - (abbreviated x - K x = y ), in which Ω is some unbounded subset of Rn. Let Xp denote the weighted space of functions x continuous on Ω and satisfying x (s) = O(|s|-p ),s → ∞We show that if the kernel k(s,t) decays like |s — t|-q as |s — t| → ∞ for some sufficiently large q (and some other mild conditions on k are satisfied), then K ∈ B(XP) (the set of bounded linear operators on Xp), for 0 ≤ p ≤ q. If also (I - K)-1 ∈ B(X0) then (I - K)-1 ∈ B(XP) for 0 < p < q, and (I- K)-1∈ B(Xq) if further conditions on k hold. Thus, if k(s, t) = O(|s — t|-q). |s — t| → ∞, and y(s)=O(|s|-p), s → ∞, the asymptotic behaviour of the solution x may be estimated as x (s) = O(|s|-r), |s| → ∞, r := min(p, q). The case when k(s,t) = к(s — t), so that the equation is of Wiener-Hopf type, receives especial attention. Conditions, in terms of the symbol of I — K, for I — K to be invertible or Fredholm on Xp are established for certain cases (Ω a half-space or cone). A boundary integral equation, which models three-dimensional acoustic propaga-tion above flat ground, absorbing apart from an infinite rigid strip, illustrates the practical application and sharpness of the above results. This integral equation mod-els, in particular, road traffic noise propagation along an infinite road surface sur-rounded by absorbing ground. We prove that the sound propagating along the rigid road surface eventually decays with distance at the same rate as sound propagating above the absorbing ground.

A uniformly valid far field asymptotic expansion of the green function for two-dimensional propagation above a homogeneous impedance plane

A generalized asymptotic expansion in the far field for the problem of cylindrical wave reflection at a homogeneous impedance plane is derived. The expansion is shown to be uniformly valid over all angles of incidence and values of surface impedance, including the limiting cases of zero and infinite impedance. The technique used is a rigorous application of the modified steepest descent method of Ot

On asymptotic behavior at infinity and the finite section method for integral equations on the half-line

e consider integral equations on the half-line of the form and the finite section approximation to x obtained by replacing the infinite limit of integration by the finite limit β. We establish conditions under which, if the finite section method is stable for the original integral equation (i.e. exists and is uniformly bounded in the space of bounded continuous functions for all sufficiently large β), then it is stable also for a perturbed equation in which the kernel k is replaced by k + h. The class of perturbations allowed includes all compact and some non-compact perturbations of the integral operator. Using this result we study the stability and convergence of the finite section method in the space of continuous functions x for which ()()()=−∫∞dttxt,sk)s(x0()syβxβx()sxsp+1 is bounded. With the additional assumption that ()(tskt,sk−≤ where ()()(),qsomefor,sassOskandRLkq11>+∞→=∈− we show that the finite-section method is stable in the weighted space for ,qp≤≤0 provided it is stable on the space of bounded continuous functions. With these results we establish error bounds in weighted spaces for x - xβ and precise information on the asymptotic behaviour at infinity of x. We consider in particular the case when the integral operator is a perturbation of a Wiener-Hopf operator and illustrate this case with a Wiener-Hopf integral equation arising in acoustics.

Property loss potentials for European midlatitude storms in a changing climate

Winter storms of the midlatitudes are an important factor for property losses caused by natural hazards over Europe. The storm series in early 1990 and late 1999 led to enormous economic damages and insured claims. Although significant trends in North Atlantic/European storm activity have not been identified for the last few decades, recent studies provide evidence that under anthropogenic climate change the number of extreme storms could increase, whereas the total number of cyclones may be slightly reduced. In this study, loss potentials derived from an ensemble of climate models using a simple storm damage model under climate change conditions are shown. For the United Kingdom and Germany ensemble-mean storm-related losses are found to increase by up to 37%. Furthermore, the interannual variability of extreme events will increase leading to a higher risk of extreme storm activity and related losses.

On the group-velocity property for wave-activity conservation laws

The density and the flux of wave-activity conservation laws are generally required to satisfy the group-velocity property: under the WKB approximation (i.e., for nearly monochromatic small-amplitude waves in a slowly varying medium), the flux divided by the density equals the group velocity. It is shown that this property is automatically satisfied if, under the WKB approximation, the only source of rapid variations in the density and the flux lies in the wave phase. A particular form of the density, based on a self-adjoint operator, is proposed as a systematic choice for a density verifying this condition.