The timing and selection ability of UK property funds: an empirical investigation

This paper examines the selectivity and market timing performance of a sample of 21 UK property funds over the period Q3 1977 through to Q2 1987. The main finding of which that there is evidence of some superior selectivity performance on the part of UK property funds but that there are few funds who are able to successfully time the market.

Is there a place for property in the multi-asset portfolio?

The case for property has typically rested on the application of modern portfolio theory (MPT), in that property has been shown to offer increased diversification benefits within a multi asset portfolio without hurting portfolio returns especially for lower risk portfolios. However this view is based upon the use of historic, usually appraisal based, data for property. Recent research suggests strongly that such data significantly underestimates the risk characteristics of property, because appraisals explicitly or implicitly smooth out much of the real volatility in property returns. This paper examines the portfolio diversification effects of including property in a multi-asset portfolio, using UK appraisal based (smoothed) data and several derived de-smoothed series. Having considered the effects of de-smoothing, we then consider the inclusion of a further low risk asset (cash) in order to investigate further whether property's place in a low risk portfolio is maintained. The conclusions of this study are that the previous supposed benefits of including property have been overstated. Although property may still have a place in a 'balanced' institutional portfolio, the case for property needs to be reassessed and not be based simplistically on the application of MPT.

Commentary on an example of a tenancy agreement for an agricultural holding

This paper sets out an example of a standard agricultural tenancy, being one creating a tenancy from year to year and consequently covered by the agricultural holdings legislation. A facing-page commentary gives a clause-by-clause analysis of the agreement, the implications of each provision being discussed in the light of the law of contract, agricultural holdings legislation and, where appropriate, subsequent caselaw.

Producing leisure spaces out of thin air: the case of the Countryside Stewardship Scheme

This paper examines the growing dysfunction between the apparently increasing significance of diverse leisure practices in the countryside and the largely unchanging official response towards them. Although there is recognition in the recent rural White Paper (DOE and MAFF, 1995) that access is essential to enjoying the countryside, the construction of this term is dubious, since paid access agreements, based on producer requirements, are favoured over any form of demand-driven freedom to roam. Using the Countryside Stewardship Scheme (CSS) as an example of the incentive structure developed to promote this policy, the paper applies Plato's simulacrum as a reading of how this process is being utilised to underpin the dominant rights associated with rural property interests. In particular, the paper makes the point that rather than representing the corollary of a market situation, as its supporters claim, the CSS involves government grant for the eclectic provision of short term licences over ground which remains unmapped as anything other than its continued agricultural use. In concluding, the paper asserts that rather than representing an increase in the availability of leisure sites in the countryside, the CSS and other schemes represent a diversion from the wider and deeper socio-cultural process of continued wealth and power redistribution.

Marriage value and scarcity in agricultural rents: a discussion of the findings in Childers v Ankers

Formal statutory guidance to arbitrators involved in settling disputes over rents for agricultural holdings is contained in the Agricultural Holdings Act 1986. The particular features of the agricultural letting market raise valuation problems which the Act itself has failed to satisfactorily address, most notably the degree to which marriage value and scarcity should be taken into account. The 1995 Court of Appeal case of Childers v Anker addresses several of the key issues. This paper seeks to explore the findings and practical implications of the case for rental valuers and arbitrators. It argues that sitting tenants may be seriously disadvantaged by the court's judgements, not least by having to pay rents on review which reflect elements of marriage value and possibly scarcity value.

The future returns for property required by UK pension funds

In the 1970s Real Estate represented over 17% of the average pension funds total assets. Today such funds hold less than 4%, a figure not seen since the 1960s. This reduction in Real Estate holdings is mainly attributable to the relatively poor performance of Real Estate against other asset classes since the 1980s. Whether pension funds will increase their holding at any point in the future depends therefore on the expected return of Real Estate by comparison with that required to justify a particular asset holding. Using the technique of Modern Portfolio Theory (MPT), this paper assesses the required return that Real Estate would have to offer to justify a 15% holding in a mixed asset portfolio. This figure and the risk/return characteristics of the major asset classes is taken from survey data. Under a number of scenarios it is found that Real Estate can play a part in a mixed asset portfolio at the 15% level. In some cases however, the expected returns of Real Estate are not sufficient to justify a weight of 15% in this asset.

The future returns for property required by UK pension funds: the BHS data

Previous studies of the place of Property in the multi-asset portfolio have generally relied on historical data, and have been concerned with the supposed risk reduction effects that Property would have on such portfolios. In this paper a different approach has been taken. Not only are expectations data used, but we have also concentrated upon the required return that Property would have to offer to achieve a holding of 15% in typical UK pension fund portfolios. Using two benchmark portfolios for pension funds, we have shown that Property's required return is less than that expected, and therefore it could justify a 15% holding.

Recreational access to private land in England and Wales: public good; private interest

Since the Eighteenth Century the protection of public recreational access to private land has been maintained by the state through a mixture of legal rights of passage and the safeguarding of certain de facto access rights. While this situation has been modified in the last fifty years to facilitate some formalisation of access arrangements and landowner compensation in areas of high recreational pressure and low legal accessibility, recent policies indicate that a shift from public to private rights is underway. At the core of this paradigm shift are the new access payment schemes introduced as part of the restructuring of the European Common Agricultural Policy. Under these schemes landowners are now paid for 'supplying' recreational access, with the state, as the former upholder of citizen rights, now assuming the duplicitous position of further underwriting private property ownership through the effective commodification of access, while simultaneously proclaiming significant improvements in citizens' access rights.

Property company performance and real interest rates: a regime-switching approach

Linear models of property market performance may be misspecified if there exist distinct states where the market drivers behave in different ways. This paper examines the applicability of non-linear regime-based models. A Self Exciting Threshold Autoregressive (SETAR) model is applied to property company share data, using the real rate of interest to define regimes. Distinct regimes appear exhibiting markedly different market behaviour. The model both casts doubt on the specification of conventional linear models and offers the possibility of developing effective trading rules for real estate equities.

Moral intensity and willingness to pay concerning farm animal welfare issues and the implications for agricultural policy

An experimental survey was undertaken to explore the links between the characteristics of a moral issue, the degree of moral intensity/moral imperative associated with the issue (Jones, 1991), and people's stated willingness to pay (wtp) for policy to address the issue. Two farm animal welfare issues were chosen for comparison and the contingent valuation method was used to elicit people's wtp. The findings of the survey suggest that increases in moral characteristics do appear to result in an increase in moral intensity and the degree of moral imperative associated with an issue. Moreover, there was a positive link between moral intensity/moral imperative associated with an issue and people's stated wtp for policy to address the issue. The paper discusses the relevance of the findings of the survey in the context of the debate concerning the relationship between moral and economic values and the use of the contingent valuation method to estimate people's wtp of policy options with moral dimensions.

Agricultural adaptation to climate change: insights from a farming community in Sri Lanka

The vulnerability of smallholder farmers to climate change and variability is increasingly rising. As agriculture is the only source of income for most of them, agricultural adaptation with respect to climate change is vital for their sustenance and to ensure food security. In order to develop appropriate strategies and institutional responses, it is necessary to have a clear understanding of the farmers’ perception of climate change, actual adaptations at farm-level and what factors drive and constrain their decision to adapt. Thus, this study investigates the farm-level adaptation to climate change based on the case of a farming community in Sri Lanka. The findings revealed that farmers’ perceived the ongoing climate change based on their experiences. Majority of them adopted measures to address climate change and variability. These adaptation measures can be categorised into five groups, such as crop management, land management, irrigation management, income diversification, and rituals. The results showed that management of non-climatic factors was an important strategy to enhance farmers’ adaptation, particularly in a resource-constrained smallholder farming context. The results of regression analysis indicated that human cognition was an important determinant of climate change adaptation. Social networks were also found to significantly influence adaptation. The study also revealed that social barriers, such as cognitive and normative factors, are equally important as other economic barriers to adaptation. While formulating and implementing the adaptation strategies, this study underscored the importance of understanding socio-economic, cognitive and normative aspects of the local communities.

The challenge of self-regulation in commercial property leasing: a study of lease codes in the UK.

Purpose – UK Government policy to address perceived market failure in commercial property leasing has largely been pursued through industry self-regulation. Yet, it is proving difficult to assess whether self-regulation on leasing has been a “success”, or even to determine how to evaluate this. The purpose of this paper is to provide a framework for this and a clearer understanding of self-regulation in commercial leasing. Design/methodology/approach – A literature review suggests key criteria to explain the (in)effectiveness of self-regulation. UK lease codes are analysed in the light of this literature, drawing on previous research carried out by the authors on the operation of these codes. Findings – Lease codes appear to be failing as an effective system of self-regulation. While there are influential market actors championing them, the fragmentation of the leasing process lessens this influence. The structures are not there to ensure implementation, monitor compliance and record views of affected stakeholders. Research limitations/implications – This work adds to the literature on self-regulation in general, and provides an insight into its operation in a previously unexplored industry. Research is needed into the experience of other countries in regulating the property industry by voluntary means. Social implications – There are institutional limitations to self-regulation within the property industry. This has implications for policy makers in considering the advantages and limitation of using a voluntary solution to achieve policy aims within the commercial leasing market. Originality/value – This paper provides a first step in considering the lease codes in the wider context of industry self-regulation and is relevant to policy makers and industry bodies.

The implications of the 2003 Common Agricultural Policy reforms for land use and landscape quality in England

The assessment of the potential landscape impacts of the latest Common Agricultural Policy reforms constitutes a challenge for policy makers and it requires the development of models that can reliably project the likely spatial distribution of land uses. The aim of this study is to investigate the impact of 2003 CAP reforms to land uses and rural landscapes across England. For this purpose we modified an existing economic model of agriculture, the Land-Use Allocation Model (LUAM) to provide outputs at a scale appropriate for informing a semi-quantitative landscape assessment at the level of ‘Joint Character Areas’ (JCAs). Overall a decline in the cereal and oilseed production area is projected but intensive arable production will persist in specific locations (East of England, East Midlands and South East), having ongoing negative effects on the character of many JCAs. The impacts of de-coupling will be far more profound on the livestock sector; extensification of production will occur in traditional mixed farming regions (e.g. the South West), a partial displacement of cattle by sheep in the upland regions and an increase in the sheep numbers is expected in the lowlands (South East, Eastern and East Midlands). This extensification process will affect positively those JCAs of mixed farming conditions, but it will have negative impacts on the JCAs of historically low intensity farming (e.g. the uplands of north-west) because they will suffer from under-management and land idling. Our analysis shows that the territorialisation between intensively and extensively agricultural landscapes will continue.