The initial return performance of UK property company IPOs

This paper presents empirical evidence for a sample of 48 UK property company initial public offerings over the period 1986 to 1995. From which a number of conclusions can be drawn. First, property companies in general show positive average first day returns. Second, the average first day return by property trading companies is significantly higher than that for property investment companies

Asset allocation, cross-class correlation and the structure of property returns

Practical applications of portfolio optimisation tend to proceed on a “top down” basis where funds are allocated first at asset class level (between, say, bonds, cash, equities and real estate) and then, progressively, at sub-class level (within property to sectors, office, retail, industrial for example). While there are organisational benefits from such an approach, it can potentially lead to sub-optimal allocations when compared to a “global” or “side-by-side” optimisation. This will occur where there are correlations between sub-classes across the asset divide that are masked in aggregation – between, for instance, City offices and the performance of financial services stocks. This paper explores such sub-class linkages using UK monthly stock and property data. Exploratory analysis using clustering procedures and factor analysis suggests that property performance and equity performance are distinctive: there is little persuasive evidence of contemporaneous or lagged sub-class linkages. Formal tests of the equivalence of optimised portfolios using top-down and global approaches failed to demonstrate significant differences, whether or not allocations were constrained. While the results may be a function of measurement of market returns, it is those returns that are used to assess fund performance. Accordingly, the treatment of real estate as a distinct asset class with diversification potential seems justified.

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.

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.

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.

Urban land and property ownership patterns in the UK: trends and forces for change

The first part of this review examines what is meant by ‘urban land and property’ (ULP) and looks at the background of ULP in the light of trends in UK urban areas over the past 50 years. Key conceptual approaches to the ULP ‘ownership issue’ are identified, together with the constraints to empirical analysis, which include a lack of data and patchy and inconsistent datasets. Three main components of ULP ownership in the UK are then examined using published data on commercial property, residential property and urban land, including ‘previously developed land’ (PDL) and ‘development land, covering both the private and public sectors. The review examines past trends in ULP ownership patterns in these sectors within the UK, and the key drivers which have created the present day patterns of ULP ownership. It concludes by identifying possible future trends in ULP ownership over the next 50 years to 2060 in the three main ULP sectors.

Development appraisal in practice: some evidence from the planning system

Due to the requirement to demonstrate financial feasibility of policy proposals and scheme-specific planning obligations, development viability and development appraisal have become core themes in the English planning system. The objective of this paper is to evaluate the application of development appraisal in practice. The paper reviews the literature and the models available to assess the viability of development and analyses a sample 19 development viability appraisals to identify practice. The paper concludes that the practice of development appraisal deviates significantly from the tenets of capital budgeting theory. In particular, in addition to a propensity to oversimplify the timing of income and expenditure, the way in which debt, developer’s return and value and cost change are handled in practice illustrates a major gap between mainstream capital budgeting theory and development appraisal in practice.

Integrating Sustainability into Brownfield Regeneration: Rhetoric or Reality? – An Analysis of the UK Development Industry

In the UK and elsewhere the use of the term ‘sustainable brownfield regeneration’ has resulted from the interweaving of two key policy themes, comprising ‘sustainable development’ and ‘brownfield regeneration’. This paper provides a critical overview of brownfield policy within the context of the emerging sustainable development agenda in the UK, and examines the development industry's role and attitudes towards key aspects of sustainable development and brownfield regeneration. The paper analyses results from a survey of commercial and residential developers carried out in mid‐2004, underpinned by structured interviews with eleven developers in 2004–2005, which form part of a two‐and‐half‐year EPSRC‐funded project. The results suggest that despite the increasing focus on sustainability in government policy, the development industry seems ill at ease with precisely how sustainable development can be implemented in brownfield schemes. These and other findings, relating to sustainability issues (including the impact of climate change on future brownfield development), have important ramifications for brownfield regeneration policy in the UK. In particular, the research highlights the need for better metrics and benchmarks to be developed to measure ‘sustainable brownfield regeneration’. There also needs to be greater awareness and understanding of alternative clean‐up technologies to ‘dig and dump’.

An analysis of the UK development industry's role in brownfield regeneration

Purpose – This study aims to provide a review of brownfield policy and the emerging sustainable development agenda in the UK, and to examine the development industry’s (both commercial and residential) role and attitudes towards brownfield regeneration and contaminated land. Design/methodology/approach – The paper analyses results from a two-stage survey of commercial and residential developers carried out in mid-2004, underpinned by structured interviews with 11 developers. Findings – The results suggest that housebuilding on brownfield is no longer the preserve of specialists, and is now widespread throughout the industry in the UK. The redevelopment of contaminated sites for residential use could be threatened by the impact of the EU Landfill Directive. The findings also suggest that developers are not averse to developing on contaminated sites, although post-remediation stigma remains an issue. The market for warranties and insurance continues to evolve. Research limitations/implications – The survey is based on a sample which represents nearly 30 per cent of UK volume housebuilding. Although the response in the smaller developer groups was relatively under-represented, non-response bias was not found to be a significant issue. More research is needed to assess the way in which developers approach brownfield regeneration at a local level. Practical implications – The research suggests that clearer Government guidance in the UK is needed on how to integrate concepts of sustainability in brownfield development and that EU policy, which has been introduced for laudable aims, is creating tensions within the development industry. There may be an emphasis towards greenfield development in the future, as the implications of the Barker review are felt. Originality/value – This is a national survey of developers’ attitudes towards brownfield development in the UK, following the Barker Review, and highlights key issues in UK and EU policy layers. Keywords Brownfield sites, Contamination Paper type Research paper

The creativity of action: Property, Kin and the social in African artisanal mining

Analyses of neo-liberal change in African mining tend to frame discussion through the lens of an overarching structural perspective. Far less attention has been paid to the way change is enacted within social relations in mining communities. To this end, our chapter considers how development in the Tanzanian mineral sector transforms people’s relationships and stimulates new iterations of power and agency within local trajectories of development, focusing on the case of artisanal gold mining in Mgusu village in Geita region, Tanzania. The aim is to trace how neo-liberal change configures market rationality and property relations in ways that can fundamentally alter social relationships within the local community, occupational groups and families, raising both opportunities for wealth accumulation and the potential to entrench poverty. The creative action involved in these processes generates new associational ties and repertoires of practice, as miners’ respond to change and the need to protect their livelihoods.

Building the web: the Internet and the property profession

The report examines the development of the Internet and Intranets in the world of business and commerce, drawing on previous literature and research. The new technology is explained, and key issues examined, such as the impact of the Internet on the surveyor's role as 'information broker' and its likely effect on clients' property requirements. The research is based on an analysis of 261 postal questionnaire responses and eight case study interviews from a sample of general practice and quantity surveying practices and corporates. For the first time the property profession is examined in detail and the key drivers, barriers and benefits of Internet use are identified for a range of different sized organisations.

Working with legal pluralism: widowhood, property inheritance and poverty alleviation in urban Senegal

This article explores the role of women's inheritance and ownership of property in urban Senegal. It shows how being able to inherit and own property promotes the economic and emotional security of widows and their children in urban areas, and discusses the challenges posed by legal pluralism in working on poverty alleviation and social protection in the city.

The persistence of distance: a gravity model of European cross-border real estate development flows

Purpose – This paper aims to investigate the scale and drivers of cross-border real estate development in Western Europe and Central and Eastern Europe. Design/methodology/approach – Placing cross-border real estate development within the framework of foreign direct investment (FDI), conceptual complexities in characterizing the notional real estate developer are emphasized. Drawing upon a transaction database, this paper proxies cross-border real estate development flows with asset sales by developers. Findings – Much higher levels of market penetration by international real estate developers are found in the less mature markets of Central and Eastern Europe. Analysis suggests a complex range of determinants with physical distance remaining a consistent barrier to cross-border development flows. Originality/value – This analysis adds significant value in terms of understanding cross-border real estate development flows. In this study, a detailed examination of the issues based on a rigorous empirical analysis through gravity modelling is offered. The gravity framework is one of the most confirmed empirical regularities in international economics and commonly applied to trade, FDI, migration, foreign portfolio investment inter alia. This paper assesses the extent to which it provides useful insights into the pattern of cross-border real estate development flows.