Benchmarking and valuation issues in measuring depreciation for European office markets

Purpose – The paper addresses the practical problems which emerge when attempting to apply longitudinal approaches to the assessment of property depreciation using valuation-based data. These problems relate to inconsistent valuation regimes and the difficulties in finding appropriate benchmarks. Design/methodology/approach – The paper adopts a case study of seven major office locations around Europe and attempts to determine ten-year rental value depreciation rates based on a longitudinal approach using IPD, CBRE and BNP Paribas datasets. Findings – The depreciation rates range from a 5 per cent PA depreciation rate in Frankfurt to a 2 per cent appreciation rate in Stockholm. The results are discussed in the context of the difficulties in applying this method with inconsistent data. Research limitations/implications – The paper has methodological implications for measuring property investment depreciation and provides an example of the problems in adopting theoretically sound approaches with inconsistent information. Practical implications – Valuations play an important role in performance measurement and cross border investment decision making and, therefore, knowledge of inconsistency of valuation practice aids decision making and informs any application of valuation-based data in the attainment of depreciation rates. Originality/value – The paper provides new insights into the use of property market valuation data in a cross-border context, insights that previously had been anecdotal and unproven in nature.

Diaspora return of transnational migrants to Trinidad and Tobago: the additional contributions of social remittances

Current enthusiasm among development stakeholders for the enticement and recruitment ‘back home’ of skilled Diaspora migrants has predominantly revolved around how human capital gains and transfers of capital, knowledge, technical skills and workplace entrepreneurialism and innovation can be facilitated. In this article, we widen the conceptual basis of this dimension of the migration–development nexus, by bringing the additional contributions of the social remittances that return migrants offer, and practice, into the mix. As evidence, the article examines how and why a sample of ‘middling’1 Trinidadian transnational professionals engage in social development activities and why experiences vary widely on their return. Their views are appraised through the verbal optic of their narratives, which they shared with us during in-depth interviews. Several among these Diaspora returnees appear to be agents for the diffusion and infusion of social capital and non-monetary, social remittances in the homeland to which they have returned in mid-life and mid-career. Others are disappointed, or frustrated, and have their hopes dashed, leading to thoughts of re-migration, or re-return. Despite such difficulties, we find that family belonging and national pride strengthens many of these return migrants’ development potential through their deeply felt commitments to local ‘capacity-building’.

The dynamics of asset prices and transaction activity in illiquid markets: the case of private commercial real estate

This paper investigates the relationship between capital flows, turnover and returns for the UK private real estate market. We examine a number of possible implication of capital flows and turnover on capital returns testing for evidence of a price pressure effect, ‘return chasing’ behaviour and information revelation. The main tool of analysis is a panel vector autoregressive (VAR) regression model in which institutional capital flows, turnover and returns are specified as endogenous variables in a two equation system in which we also control for macro-economic variables. Data on flows, turnover and returns are obtained for the 10 market segments covering the main UK commercial real estate sectors. Our results do not support the widely-held belief among practitioners that capital flows have a ‘price pressure’ effect. Although there is some evidence of return chasing behaviour, the short timescales involved suggest this finding may be due to delayed recording of flows relative to returns given the difficulties of market entry. We find a significant positive relationship between lagged turnover and contemporaneous capital returns, suggesting that asset turnover provides pricing information.

Discerning policy and drivers for sustainable facilities management practice

Due to the changing nature of the facilities management (FM) profession, facilities managers are increasingly engaged with the evolving sustainability agenda in the UK and the development or uptake of sustainability policies within their organisations. This study investigates how facilities managers are engaging with the sustainability agenda and the drivers, policy issues and information they use to improve their sustainability performance management. A web based self-administered questionnaire survey of facilities managers in the UK was conducted to identify drivers and issues that influence and support good sustainable practices. A total of 268 facilities managers responded. The results indicate that legislation is the most important driver for the implementation of sustainable practices. Corporate image and Organisational ethos are also recognised. However demand for efficient monitoring, management and reporting on environmental impact is not highly rated even though the top three issues of sustainability managed by facilities managers are energy management, waste and recycling management and carbon footprint. In addition, facilities managers are expected to take ownership of activities assigned to the reduction of carbon emission. Government industries and organisation with high turnover are more likely to have a sustainability policy. Financial constraints are the main barriers while legislations are the main driver for implementing sustainability. For non-profit organisations and the charitable sector, financial constraints are no hindrance to implementing a sustainability policy. The conclusion drawn is that sustainability agendas continue to be influenced by regulated environmental issues rather than a balanced approach which takes into consideration the wider social and economic aspects of sustainability. While this scenario is far from ideal, the expectation is that the organisation will trust FM to take a vital role in delivering a comprehensive sustainability policy due to the rising tide of legislation, public scrutiny, as well as the needed business case for genuinely embracing sustainability. However, as the integration of sustainability with core business strategies is continuously evolving the emphasis on different drivers will vary from organisation to organisation as well as the responsibilities of facilities managers.

Standard cost model: three different paths and their common problems

Red tape is not desirable as it impedes business growth. Relief from the administrative burdens that businesses face due to legislation can benefit the whole economy, especially at times of recession. However, recent governmental initiatives aimed at reducing administrative burdens have encountered some success, but also failures. This article compares three national initiatives - in the Netherlands, UK and Italy - aimed at cutting red tape by using the Standard Cost Model. Findings highlight the factors affecting the outcomes of measurement and reduction plans and ways to improve the Standard Cost Model methodology.

An easily implemented agro-hydrological procedure with dynamic root simulation for water transfer in the crop-soil system: validation and application

Models for water transfer in the crop-soil system are key components of agro-hydrological models for irrigation, fertilizer and pesticide practices. Many of the hydrological models for water transfer in the crop-soil system are either too approximate due to oversimplified algorithms or employ complex numerical schemes. In this paper we developed a simple and sufficiently accurate algorithm which can be easily adopted in agro-hydrological models for the simulation of water dynamics. We used a dual crop coefficient approach proposed by the FAO for estimating potential evaporation and transpiration, and a dynamic model for calculating relative root length distribution on a daily basis. In a small time step of 0.001 d, we implemented algorithms separately for actual evaporation, root water uptake and soil water content redistribution by decoupling these processes. The Richards equation describing soil water movement was solved using an integration strategy over the soil layers instead of complex numerical schemes. This drastically simplified the procedures of modeling soil water and led to much shorter computer codes. The validity of the proposed model was tested against data from field experiments on two contrasting soils cropped with wheat. Good agreement was achieved between measurement and simulation of soil water content in various depths collected at intervals during crop growth. This indicates that the model is satisfactory in simulating water transfer in the crop-soil system, and therefore can reliably be adopted in agro-hydrological models. Finally we demonstrated how the developed model could be used to study the effect of changes in the environment such as lowering the groundwater table caused by the construction of a motorway on crop transpiration. (c) 2009 Elsevier B.V. All rights reserved.

The Impact of office productivity cloud computing on energy consumption and greenhouse gas emissions

Cloud computing is usually regarded as being energy efficient and thus emitting less greenhouse gases (GHG) than traditional forms of computing. When the energy consumption of Microsoft’s cloud computing Office 365 (O365) and traditional Office 2010 (O2010) software suites were tested and modeled, some cloud services were found to consume more energy than the traditional form. The developed model in this research took into consideration the energy consumption at the three main stages of data transmission; data center, network, and end user device. Comparable products from each suite were selected and activities were defined for each product to represent a different computing type. Microsoft provided highly confidential data for the data center stage, while the networking and user device stages were measured directly. A new measurement and software apportionment approach was defined and utilized allowing the power consumption of cloud services to be directly measured for the user device stage. Results indicated that cloud computing is more energy efficient for Excel and Outlook which consumed less energy and emitted less GHG than the standalone counterpart. The power consumption of the cloud based Outlook (8%) and Excel (17%) was lower than their traditional counterparts. However, the power consumption of the cloud version of Word was 17% higher than its traditional equivalent. A third mixed access method was also measured for Word which emitted 5% more GHG than the traditional version. It is evident that cloud computing may not provide a unified way forward to reduce energy consumption and GHG. Direct conversion from the standalone package into the cloud provision platform can now consider energy and GHG emissions at the software development and cloud service design stage using the methods described in this research.

A word of caution on calculating market-based minimum capital risk requirements

This paper demonstrates that the use of GARCH-type models for the calculation of minimum capital risk requirements (MCRRs) may lead to the production of inaccurate and therefore inefficient capital requirements. We show that this inaccuracy stems from the fact that GARCH models typically overstate the degree of persistence in return volatility. A simple modification to the model is found to improve the accuracy of MCRR estimates in both back- and out-of-sample tests. Given that internal risk management models are currently in widespread usage in some parts of the world (most notably the USA), and will soon be permitted for EC banks and investment firms, we believe that our paper should serve as a valuable caution to risk management practitioners who are using, or intend to use this popular class of models.

Individual assets, market structure and the drivers of return

Much UK research and market practice on portfolio strategy and performance benchmarking relies on a sector‐geography subdivision of properties. Prior tests of the appropriateness of such divisions have generally relied on aggregated or hypothetical return data. However, the results found in aggregate may not hold when individual buildings are considered. This paper makes use of a dataset of individual UK property returns. A series of multivariate exploratory statistical techniques are utilised to test whether the return behaviour of individual properties conforms to their a priori grouping. The results suggest strongly that neither standard sector nor regional classifications provide a clear demarcation of individual building performance. This has important implications for both portfolio strategy and performance measurement and benchmarking. However, there do appear to be size and yield effects that help explain return behaviour at the property level.

Equipped to deal with uncertainty in climate and impacts predictions: lessons from internal peer review

The quantification of uncertainty is an increasingly popular topic, with clear importance for climate change policy. However, uncertainty assessments are open to a range of interpretations, each of which may lead to a different policy recommendation. In the EQUIP project researchers from the UK climate modelling, statistical modelling, and impacts communities worked together on ‘end-to-end’ uncertainty assessments of climate change and its impacts. Here, we use an experiment in peer review amongst project members to assess variation in the assessment of uncertainties between EQUIP researchers. We find overall agreement on key sources of uncertainty but a large variation in the assessment of the methods used for uncertainty assessment. Results show that communication aimed at specialists makes the methods used harder to assess. There is also evidence of individual bias, which is partially attributable to disciplinary backgrounds. However, varying views on the methods used to quantify uncertainty did not preclude consensus on the consequential results produced using those methods. Based on our analysis, we make recommendations for developing and presenting statements on climate and its impacts. These include the use of a common uncertainty reporting format in order to make assumptions clear; presentation of results in terms of processes and trade-offs rather than only numerical ranges; and reporting multiple assessments of uncertainty in order to elucidate a more complete picture of impacts and their uncertainties. This in turn implies research should be done by teams of people with a range of backgrounds and time for interaction and discussion, with fewer but more comprehensive outputs in which the range of opinions is recorded.

Biogeochemical cycles and biodiversity as key drivers of ecosystem services provided by soils

Soils play a pivotal role in major global biogeochemical cycles (carbon, nutrient and water), while hosting the largest diversity of organisms on land. Because of this, soils deliver fundamental ecosystem services, and management to change a soil process in support of one ecosystem service can either provide co-benefits to other services or can result in trade-offs. In this critical review, we report the state-of-the-art understanding concerning the biogeochemical cycles and biodiversity in soil, and relate these to the provisioning, regulating, supporting and cultural ecosystem services which they underpin. We then outline key knowledge gaps and research challenges, before providing recommendations for management activities to support the continued delivery of ecosystem services from soils. We conclude that although there are knowledge gaps that require further research, enough is known to start improving soils globally. The main challenge is in finding ways to share knowledge with soil managers and policy-makers, so that best-practice management can be implemented. A key element of this knowledge sharing must be in raising awareness of the multiple ecosystem services underpinned by soils, and the natural capital they provide. The International Year of Soils in 2015 presents the perfect opportunity to begin a step-change in how we harness scientific knowledge to bring about more sustainable use of soils for a secure global society.