Influences on secured lending property valuations in the UK

A significant part of bank lending in the UK is secured on commercial property and valuations play an important part in this process. They are an integral part of risk management within the banking sector. It is therefore important that valuations are independent and objective and are used properly to ensure that secured lending is soundly based from the perspective of both lender and borrower. The purpose of this research is to examine objectivity and transparency in the valuation process for bank lending and to identify any influences which may undermine the process. A detailed analysis of 31 valuation negligence cases has been followed by two focus groups of lenders and valuers and also questionnaire surveys of commercial lenders and valuers. Many stakeholders exist, for example lenders, borrowers and brokers, who are able to influence the process in various ways. The strongest evidence of overt influence in the process comes from the method of valuer selection with borrowers and brokers seen to be heavily involved. There is some also some evidence of influence during the draft valuation process. A significant minority of valuers feel that inappropriate pressure is applied by borrowers and brokers yet there is no apparent part of the process that leads to this. The panel system employed by lenders is found to be a significant part of the system and merits further examination. The pressure felt by valuers needs more investigation along with the question of if and how the process could dispel such feelings. This is seen as particularly important in the context of bank regulation.

Land re-use, complexity and actor-networks: a framework for research

This paper will present a conceptual framework for the examination of land redevelopment based on a complex systems/networks approach. As Alvin Toffler insightfully noted, modern scientific enquiry has become exceptionally good at splitting problems into pieces but has forgotten how to put the pieces back together. Twenty-five years after his remarks, governments and corporations faced with the requirements of sustainability are struggling to promote an ‘integrated’ or ‘holistic’ approach to tackling problems. Despite the talk, both practice and research provide few platforms that allow for ‘joined up’ thinking and action. With socio-economic phenomena, such as land redevelopment, promising prospects open up when we assume that their constituents can make up complex systems whose emergent properties are more than the sum of the parts and whose behaviour is inherently difficult to predict. A review of previous research shows that it has mainly focused on idealised, ‘mechanical’ views of property development processes that fail to recognise in full the relationships between actors, the structures created and their emergent qualities. When reality failed to live up to the expectations of these theoretical constructs then somebody had to be blamed for it: planners, developers, politicians. However, from a ‘synthetic’ point of view the agents and networks involved in property development can be seen as constituents of structures that perform complex processes. These structures interact, forming new more complex structures and networks. Redevelopment then can be conceptualised as a process of transformation: a complex system, a ‘dissipative’ structure involving developers, planners, landowners, state agencies etc., unlocks the potential of previously used sites, transforms space towards a higher order of complexity and ‘consumes’ but also ‘creates’ different forms of capital in the process. Analysis of network relations point toward the ‘dualism’ of structure and agency in these processes of system transformation and change. Insights from actor network theory can be conjoined with notions of complexity and chaos to build an understanding of the ways in which actors actively seek to shape these structures and systems, whilst at the same time are recursively shaped by them in their strategies and actions. This approach transcends the blame game and allows for inter-disciplinary inputs to be placed within a broader explanatory framework that does away with many past dichotomies. Better understanding of the interactions between actors and the emergent qualities of the networks they form can improve our comprehension of the complex socio-spatial phenomena that redevelopment comprises. The insights that this framework provides when applied in UK institutional investment into redevelopment are considered to be significant.

Forecasting UK real estate cycle phases with leading indicators: a probit approach

This paper examines the significance of widely used leading indicators of the UK economy for predicting the cyclical pattern of commercial real estate performance. The analysis uses monthly capital value data for UK industrials, offices and retail from the Investment Property Databank (IPD). Prospective economic indicators are drawn from three sources namely, the series used by the US Conference Board to construct their UK leading indicator and the series deployed by two private organisations, Lombard Street Research and NTC Research, to predict UK economic activity. We first identify turning points in the capital value series adopting techniques employed in the classical business cycle literature. We then estimate probit models using the leading economic indicators as independent variables and forecast the probability of different phases of capital values, that is, periods of declining and rising capital values. The forecast performance of the models is tested and found to be satisfactory. The predictability of lasting directional changes in property performance represents a useful tool for real estate investment decision-making.

Motivations for innovation in the built environment: new directions for research

Innovation in the built environment involves multiple actors with diverse motivations. Policy-makers find it difficult to promote changes that require cooperation from these numerous and dispersed actors and to align their sometimes divergent interests. Established research traditions on the economics and management of innovation pay only limited attention to stakeholder choices, engagement and motivation. This paper reviews the insights that emerge as research in these traditions comes into contact with work on innovation from sociological and political perspectives. It contributes by highlighting growing areas of research on user involvement in complex innovation, collective action, distributed innovation and transition management. To differing extents, these provide approaches to incorporate the motivations of different actors into theoretical understanding. These indicate new directions for research that promise to enrich understanding of innovation.