Systematic property risk: quantifying UK property betas 1983-2005

The increased frequency in reporting UK property performance figures, coupled with the acceptance of the IPD database as the market standard, has enabled property to be analysed on a comparable level with other more frequently traded assets. The most widely utilised theory for pricing financial assets, the Capital Asset Pricing Model (CAPM), gives market (systematic) risk, beta, centre stage. This paper seeks to measure the level of systematic risk (beta) across various property types, market conditions and investment holding periods. This paper extends the authors’ previous work on investment holding periods and how excess returns (alpha) relate to those holding periods. We draw on the uniquely constructed IPD/Gerald Eve transactions database, containing over 20,000 properties over the period 1983-2005. This research allows us to confirm our initial findings that properties held over longer periods perform in line with overall market performance. One implication of this is that over the long-term performance may be no different from an index tracking approach.

Holding periods and investment performance: analysing UK office returns 1983-2003

Drawing on a unique database of office properties constructed for Gerald Eve by IPD, this paper examines the holding periods of individual office properties sold between 1983 and 2003. It quantifies the holding periods of sold properties and examines the relationship between the holding period and investment performance. Across the range of holding periods, excess returns (performance relative to the market) are evenly distributed. There are as many winners as there are losers. The distribution of excess returns over different holding periods is widely spread with the risk of under-performance greater over short holding periods. Over the longer term, excess performance is confined to a narrow range and individual returns are more likely to perform in line with the market as a whole.

Ornamental Mediterranean plants in the UK: root adaptations to hypoxia and anoxia

Mediterranean species are popular landscape plants in the UK and well suited to the predicted climate change scenarios of hotter, drier summers. What is less clear is how these species will respond to the more unpredictable rainfall patterns also anticipated, where soil water-logging may become more prevalent, especially in urban environments where soil sealing can restrict drainage. Pot experiments on flooding of four Mediterranean species (Cistus × hybridus, Lavandula angustifolia ‘Munstead’, Salvia officinalis and Stachys byzantina) showed that the effects of waterlogging were only severe when the temperature was high and flooding prolonged. All plants survived the flooding in winter, but during the summer a 17-day flood resulted in the death of 30-40% of the Salvia officinalis and Cistus × hybridus. To examine the response of roots to oxygen deprivation over a range of conditions from total absence of oxygen (anoxia), low oxygen (hypoxia) and full aeration, rooted cuttings of Salvia officinalis were grown in a hydroponic-based system and mixtures of oxygen and nitrogen gases bubbled through the media. Anoxia was found to reduce root development dramatically. When the plants were subjected to a period of hypoxia they responded by increasing the production of lateral roots close to the surface thus enabling them to acclimate to subsequent anoxia. This greatly increased their chances of survival.