Rational expectations? Developer behaviour and development cycles in the central London office market

Purpose – Expectations of future market conditions are acknowledged to be crucial for the development decision and hence for shaping the built environment. The purpose of this paper is to study the central London office market from 1987 to 2009 and test for evidence of rational, adaptive and naive expectations. Design/methodology/approach – Two parallel approaches are applied to test for either rational or adaptive/naive expectations: vector auto-regressive (VAR) approach with Granger causality tests and recursive OLS regression with one-step forecasts. Findings – Applying VAR models and a recursive OLS regression with one-step forecasts, the authors do not find evidence of adaptive and naïve expectations of developers. Although the magnitude of the errors and the length of time lags between market signal and construction starts vary over time and development cycles, the results confirm that developer decisions are explained, to a large extent, by contemporaneous and historic conditions in both the City and the West End, but this is more likely to stem from the lengthy design, financing and planning permission processes rather than adaptive or naive expectations. Research limitations/implications – More generally, the results of this study suggest that real estate cycles are largely generated endogenously rather than being the result of large demand shocks and/or irrational behaviour. Practical implications – Developers may be able to generate excess profits by exploiting market inefficiencies but this may be hindered in practice by the long periods necessary for planning and construction of the asset. Originality/value – This paper focuses the scholarly debate of real estate cycles on the role of expectations. It is also one of very few spatially disaggregate studies of the subject matter.

Processes controlling DOC in pore water during simulated drought cycles in six different UK peats

The effect of episodic drought on dissolved organic carbon (DOC) dynamics in peatlands has been the subject of considerable debate, as decomposition and DOC production is thought to increase under aerobic conditions, yet decreased DOC concentrations have been observed during drought periods. Decreased DOC solubility due to drought-induced acidification driven by sulphur (S) redox reactions has been proposed as a causal mechanism; however evidence is based on a limited number of studies carried out at a few sites. To test this hypothesis on a range of different peats, we carried out controlled drought simulation experiments on peat cores collected from six sites across Great Britain. Our data show a concurrent increase in sulphate (SO4) and a decrease in DOC across all sites during simulated water table draw-down, although the magnitude of the relationship between SO4 and DOC differed between sites. Instead, we found a consistent relationship across all sites between DOC decrease and acidification measured by the pore water acid neutralising capacity (ANC). ANC provided a more consistent measure of drought-induced acidification than SO4 alone because it accounts for differences in base cation and acid anions concentrations between sites. Rewetting resulted in rapid DOC increases without a concurrent increase in soil respiration, suggesting DOC changes were primarily controlled by soil acidity not soil biota. These results highlight the need for an integrated analysis of hydrologically driven chemical and biological processes in peatlands to improve our understanding and ability to predict the interaction between atmospheric pollution and changing climatic conditions from plot to regional and global scales.

Calculating the tetrahedral bond angle using spherical polars and the dot product

A proof using the methane tetrahedroid bond angle can be obtained by using spherical polar coordinates to calculate the Cartesian coordinates of the hydrogen atoms, then using the dot product of vectors.

Rotational symmetry of a methane molecule and the bond angle

The rotational symmetry of a methane molecule can be used to great advantage to calculate the bond angle. The problem is worked out in this article.

Steric stabilisation of the P_P bond in a bulky tetraorganodiphosphine: synthesis, characterisation and X-ray structure determination of tetrakis(2,4,6-triisopropylphenyl)diphosphine

We report the synthesis and characterisation of tetrakis(2,4,6-triisopropylphenyl)diphosphine. Synthesis is effected by the treatment of PCl3 with an excess of 2,4,6-triisopropylphenyllithium (or the equivalent Grignard reagent) in 70% yield. While under normal circumstances the triarylphosphine would be expected, excessive bulk prevents this, and the resulting diphosphine is, unusually, stable to PP cleavage by further organolithium moieties. The compound is stable, both thermally (m.p. 185°C) and to air and water in the solid state, although conversion to the equivalent diorganophosphinate ester is effected by boiling ethanolic solutions in air. Crystallisation from hexane/ethanol afforded pale yellow crystals of X-ray quality. The molecule is characterised by m.p., IR, NMR, elemental analysis (C, H, P) and MS. The X-ray structure shows an antiperiplanar conformation with a PP separation of 2.2461(16) Å. Comparisons are made with other diphosphines, the title compound being only the fourth simple diphosphine to be structurally characterised.

Diurnal and seasonal cycles of cloud occurrences, types and radiative impact over West Africa

This study focuses on the occurrence and type of clouds observed in West Africa, a subject which has neither been much documented nor quantified. It takes advantage of data collected above Niamey in 2006 with the ARM mobile facility. A survey of cloud characteristics inferred from ground measurements is presented with a focus on their seasonal evolution and diurnal cycle. Four types of clouds are distinguished: high-level clouds, deep convective clouds, shallow convective clouds and mid-level clouds. A frequent occurrence of the latter clouds located at the top of the Saharan Air Layer is highlighted. High-level clouds are ubiquitous throughout the period whereas shallow convective clouds are mainly noticeable during the core of the monsoon. The diurnal cycle of each cloud category and its seasonal evolution is investigated. CloudSat and CALIPSO data are used in order to demonstrate that these four cloud types (in addition to stratocumulus clouds over the ocean) are not a particularity of the Niamey region and that mid-level clouds are present over the Sahara during most of the Monsoon season. Moreover, using complementary data sets, the radiative impact of each type of clouds at the surface level has been quantified in the shortwave and longwave domain. Mid-level clouds and anvil clouds have the largest impact respectively in longwave (about 15 W m−2) and the shortwave (about 150 W m−2). Furthermore, mid-level clouds exert a strong radiative forcing in Spring at a time when the other cloud types are less numerous.

European CMBS pricing: bond, mortgage and real estate characteristics

The recent global economic crisis is often associated with the development and pricing of mortgage-backed securities (i.e. MBSs) and underlying products (i.e. sub-prime mortgages). This work uses a rich database of MBS issues and represents the first attempt to price commercial MBSs (i.e. CMBSs) in the European market. Our results are consistent with research carried out in the US market and we find that bond-, mortgage-, real estate-related and multinational characteristics show different degrees of significance in explaining European CMBS spreads at issuance. Multiple linear regression analysis using a databank of CMBSs issued between 1997 and 2007 indicates a strong relationship with bond-related factors, followed by real estate and mortgage market conditions. We also find that multinational factors are significant, with country of issuance, collateral location and access to more liquid markets all being important in explaining the cost of secured funding for real estate companies. As floater coupon tranches tend to be riskier and exhibit higher spreads, we also estimate a model using this sub-set of data and results hold, hence reinforcing our findings. Finally, we estimate our model for both tranches A and B and find that real estate factors become relatively more important for the riskier investment products.

A comparison between bond graphs switching modelling techniques implemented on a boost dc-dc converter

A Bond Graph is a graphical modelling technique that allows the representation of energy flow between the components of a system. When used to model power electronic systems, it is necessary to incorporate bond graph elements to represent a switch. In this paper, three different methods of modelling switching devices are compared and contrasted: the Modulated Transformer with a binary modulation ratio (MTF), the ideal switch element, and the Switched Power Junction (SPJ) method. These three methods are used to model a dc-dc Boost converter and then run simulations in MATLAB/SIMULINK. To provide a reference to compare results, the converter is also simulated using PSPICE. Both quantitative and qualitative comparisons are made to determine the suitability of each of the three Bond Graph switch models in specific power electronics applications

Permanent trading impacts and bond yields

We analyze four years of transaction data for euro-area sovereign bonds traded on the MTS electronic platforms. In order to measure the informational content of trading activity, we estimate the permanent price response to trades. We find not only strong evidence of information asymmetry in sovereign bond markets, but we also show the relevance of information asymmetry in explaining the cross-sectional variations of bond yields across a wide range of bond maturities and countries. Our results confirm that trades of more recently issued bonds and longer maturity bonds have a greater permanent effect on prices. We compare the price impact of trades for bonds across different maturity categories and find that trades of French and German bonds have the highest long-term price impact in the short maturity class whereas trades of German bonds have the highest permanent price impacts in the long maturity class. More importantly, we study the cross-section of bond yields and find that after controlling for conventional factors, investors demand higher yields for bonds with larger permanent trading impact. Interestingly, when investors face increased market uncertainty, they require even higher compensation for information asymmetry.

Cycles and steps in British commercial property values

This paper examines cyclical behaviour in commercial property values over the period 1956 to 1996, using a structural times series (unobserved components) approach. The influence of the transition to short rent reviews during the late 1960s and the short and long-term impacts of the 1974 and 1990 property crashes are also incorporated into the analysis, via dummy variables. It is found that once these variables are taken into account a fairly regular cyclical pattern can be discerned, with a period of about 7.8 years. Furthermore, the 1974 and 1990 property crashes are shown to have had a major long-term impact on property value growth (presumably via their influence on investors' expectations).

Concordance in global office market cycles

A large proportion of international real estate investment is concentrated in the office markets of the world’s largest cities. However, many of these global cities are also key financial services centres, highlighting the possibility of reduced economic diversification from an investor’s perspective. This paper assesses the degree of synchronization in cycles across twenty of the world’s largest office markets, finding evidence of significant concordance across a large number of markets. The results highlight the problems associated with commonalities in the underlying economic bases of the markets. The concentration of investment also raises the possibility of common flow of funds effects that may further reduce diversification opportunities.