Whose land was it anyway? The Crichel Down Rules and the sale of public land

The guiding principle of compulsory purchase of interests in land in England and Wales is that of fairness, best stated in the words of Lord Justice Scott in Horn v Sunderland Corporation when he said that the owner has “the right to be put, so far as money can do it, in the same position as if his land had not been taken from him”. In many instances, land acquired by compulsion subsequently becomes surplus to the requirements of the acquiring authority. This may be because the intended development scheme was scrapped, or substantially modified, or that after the passage of time the use of the land for which the purchase took place is no longer required. More controversially it may be that for ‘operational reasons’ the acquiring authority knowingly purchased more land than was required for the scheme. Under these circumstances, the Crichel Down Rules (‘the Rules’) require government departments and other statutory bodies to offer back to the former owners or their successors, any land previously so acquired by, or under the threat of, compulsory purchase.

Continental shift? An analysis of convergence trends in European real estate equities

European economic and political integration have been recognised as having implications for patterns of performance in national real estate and capital markets and have generated a wide body of research and commentary. In 1999, progress towards monetary integration within the European Union culminated in the introduction of a common currency and monetary policy. This paper investigates the effects of this ‘event’ on the behaviour of stock returns in European real estate companies. A range of statistical tests is applied to the performance of European property companies to test for changes in segmentation, co-movement and causality. The results suggest that, relative to the wider equity markets, the dispersion of performance is higher, correlations are lower, a common contemporaneous factor has much lower explanatory power whilst lead-lag relationships are stronger. Consequently, the evidence of transmission of monetary integration to real estate securities is less noticeable than to general securities. Less and slower integration is attributed to the relatively small size of the real estate securities market and the local and national nature of the majority of the companies’ portfolios.

Internal rents and corporate property management: a study into the use of internal rents in UK corporate organisations

Research in the late 1980s showed that in many corporate real estates users were not fully aware of the full extent of their property holdings. In many cases, not only was the value of the holdings unknown, but there was uncertainty over the actual extent of ownership within the portfolio. This resulted in a large number of corporate occupiers reviewing their property holdings during the 1990s, initially to create a definitive asset register, but also to benefit from an more efficient use of space. Good management of corporately owned property assets is of equal importance as the management of other principal resources within the company. A comprehensive asset register can be seen as the first step towards a rational property audit. For the effective, efficient and economic delivery of services, it is vital that all property holdings are utilised to the best advantage. This requires that the property provider and the property user are both fully conversant with the value of the property holding and that an asset/internal rent/charge is made accordingly. The advantages of internal rent charging are twofold. Firstly, it requires the occupying department to “contribute” an amount to the business equivalent to the open market rental value of the space that it occupies. This prevents the treating of space as a free good and, as individual profit centres, each department will then rationalise its holdings to minimise its costs. The second advantage is from a strategic viewpoint. By charging an asset rent, the holding department can identify the performance of its real estate holdings. This can then be compared to an internal or external benchmark to help determine whether the company has adopted the most efficient tenure pattern for its properties. This paper investigates the use of internal rents by UK-based corporate businesses and explains internal rents as a form of transfer pricing in the context of management and responsibility accounting. The research finds that the majority of charging organisations introduced internal rents primarily to help calculate true profits at the business unit level. However, less than 10% of the charging organisations introduced internal rents primarily to capture the return on assets within the business. There was also a sizeable element of the market who had no plans to introduce internal rents. Here, it appears that, despite academic and professional views that internal rents are beneficial in improving the efficient use of property, opinion at the business and operational level has not universally accepted this proposition.

The Finance Acts 1998 and 2000: can the owners of agricultural land continue to gain from their capital disposals?

This paper seeks to analyse and discuss, from the perspective of the owners of agricultural land, the main changes to the Capital Gains Tax regime introduced in the Finance Act 1998 and subsequently amended in the Finance Act 2000. The replacement of indexation with a new Taper relief is examined, along with the phasing out of Retirement relief, and the interaction of Taper relief with Rollover relief. The opportunity for tax mitigation by the owners of agricultural land is critically examined.

Integration and segmentation in European investment services markets: assessing the implications for international real estate investment

This paper analyses developments in the growth and configuration of the institutional savings markets within the European Union. The paper discusses the changing socio-economic context in which investment services within the EU are being delivered. The is followed by an examination of drivers of market integration such as the growth and consolidation of the fund management industry, the demographic and fiscal pressures for reform of pensions markets and the process and effects of the deregulation of investment services markets. There is a review of outstanding sources of market segmentation. The projections for future growth in pensions are outlined and implications for real estate investment assessed. It is concluded that, although numerous imponderables render reliable quantitative projections problematic, growth and restructuring of the institutional savings market is likely to increase cross-border capital flows to real estate markets.

Confucius, constructivism and the impact of continuing professional development on teachers of English in China

In this article we explore issues around the sustainability and appropriateness of professional development for secondary teachers of English in China offered by overseas providers from the perspective of teachers who completed courses at the University of Reading between 2003 and 2010. We start by offering an overview of English teaching in China. We then describe the collection and analysis of interviews and focus groups discussions involving former participants, their teaching colleagues and senior management, as well as classroom observation. Evidence is presented for changes in teachers’ philosophies of education directly attributable to participation in the courses; for improved teacher competencies (linguistic, cultural and pedagogical) in the classroom; and for the ways in which returnees are undertaking new roles and responsibilities which exploit their new understandings. Finally, we discuss the implications of these findings for both providers and sponsors of CPD for English language teachers. We conclude that the recognition of English as an essential element in the modernisation of China, together with the growing awareness of the weaknesses of traditional approaches to the teaching of the language, has opened up new spaces for dialogue concerning pedagogy and professional practice. It is clearly important, however, that new approaches to the teaching of English are presented in a way which allows teachers to decide which elements should be incorporated into their teaching and how.

The price of space: the convergence of value in use and value in exchange

This paper discusses concepts of value from the point of view of the user of the space and the counter view of the provider of the same. Land and property are factors of production. The value of the land flows from the use to which it is put, and that in turn, is dependent upon the demand (and supply) for the product or service that is produced/provided from that space. If there is a high demand for the product (at a fixed level of supply), the price will increase and the economic rent for the land/property will increase accordingly. This is the underlying paradigm of Ricardian rent theory where the supply of land is fixed and a single good is produced. In such a case the rent of land is wholly an economic rent. Economic theory generally distinguishes between two kinds of price, price of production or “value in use” (as determined by the labour theory of value), and market price or “value in exchange” (as determined by supply and demand). It is based on a coherent and consistent theory of value and price. Effectively the distinction is between what space is ‘worth’ to an individual and that space’s price of exchange in the market place. In a perfect market where any individual has access to the same information as all others in the market, price and worth should coincide. However in a market where access to information is not uniform, and where different uses compete for the same space, it is more likely that the two figures will diverge. This paper argues that the traditional reliance of valuers to use methods of comparison to determine “price” has led to an artificial divergence of “value in use” and “value in exchange”, but now such comparison are becoming more difficult due to the diversity of lettings in the market place, there will be a requirement to return to fundamentals and pay heed to the thought process of the user in assessing the worth of the space to be let.

Volatility persistence and time-varying betas in the UK real estate market

This paper investigates the degree of return volatility persistence and the time-varying behaviour of systematic risk (beta) for 31 market segments in the UK real estate market. The findings suggest that different property types exhibit differences in volatility persistence and time variability. There is also evidence that the volatility persistence of each market segment and its systematic risk are significantly positively related. Thus, the systematic risks of different property types tend to move in different directions during periods of increased market volatility. Finally, the market segments with systematic risks less than one tend to show negative time variability, while market segments with systematic risk greater than one generally show positive time variability, indicating a positive relationship between the volatility of the market and the systematic risk of individual market segments. Consequently safer and riskier market segments are affected differently by increases in market volatility.

The location of executive suites and business centers in the United States: an exploratory analysis

Increasingly, corporate occupiers seek more flexible ways of meeting their accommodation needs. One consequence of this process has been the growth of the executive suite, serviced office or business centre market. This paper, the final report of a research project funded by the Real Estate Research Institute, focuses upon the geographical distribution of business centers offering executive suites within the US. After a brief review of the development of the market, the paper examines the availability of data, provides basic descriptive statistics of the distribution of executive suites by state and by metropolitan statistical area and then attempts to model the distribution using demographic and socio-economic data at MSA level. The distribution reflects employment in key growth sectors and the position of the MSA in the urban hierarchy. An appendix presents a preliminary view of the global distribution of suites.

The risks of investing in the real estate markets of the asian region

The Asian region has become a focus of attention for investors in recent years. Due to the strong economic performance of the region, the higher expected returns in the area compared with Europe and the USA and the additional diversification benefits investment in the region would offer. Nonetheless many investors have doubts about the prudence of investing in such areas. In particular it may be felt that the expected returns offered in the countries of the Asian region are not sufficient to compensate investors for the increased risks of investing in such markets. These risks can be categorised into under four headings: investment risk, currency risk, political risk, and institutional risk. This paper analyses each of these risks in turn to see if they are sufficiently large to deter real estate investment in the region in general or in a particular country.

The causes and effects of depreciation in office buildings: a ten year update

This paper publishes the results of the 1996 study, which repeats a cross-section analysis of around 125 City of London office buildings, and examines the longitudinal data contributed by a sample of 56 unrefurbished properties common to the 1986 and 1996 City of London datasets. An estimate of the average rate of rental and capital value depreciation is made; the effect of age is shown not to be straight-line; and the causes if depreciation are measured. The results are compared with the 1986 City of London findings.

Evidence of cycles in European commercial real estate markets and some hypotheses

In this paper, we seek to achieve four objectives. First, we provide some contextual material concerning the performance of the UK real estate market relative to stocks and bonds over a long period. Second, we provide UK – and some non-UK European - evidence of the tendency for property demand, supply, prices and returns to fluctuate around their long term trends or averages. Third, we briefly examine some hypotheses which suggest institutional contributions to property cycles in European markets. Fourth, we suggest some reasons why the future may not be as cyclical as the past.

Commercial property loan valuations in the UK : the changing landscape of practice and liability

This paper is the first of two which aim to examine the major legal liability implications of changes to the commercial property loan valuation process caused by the recession in the UK property market and to make recommendations to valuers and their professional institutions to improve the quality of the process and the result. This paper identifies the market background to commercial property lending and discusses the implications of the falls in value for lenders and valuers. These include two major strands; first, the outcome of discussions between the representative bodies of these two groups and, second, the increasing litigation caused by lenders suing valuers for professional negligence. The discussions between representative groups have driven a debate on the valuation process leading to a number of reports and guidance notes. This paper discusses the outcomes paying particular attention to the basis of valuation for loan purposes and the provision of additional information in valuation reports. This paper also reviews the legal framework which influences the relationship between the lenders and valuers and discusses the duty of care. The role of instructions in the valuation process, the significance of the identity of the person to be advised and the possibility of a conflict of interest arising are all considered. The paper also addresses the issue of the standards required of a commercial loan valuer, including how this is interpreted by the courts and the legal status of professional guidance notes. The paper concludes by identifying potential areas for dispute within the loan valuation process and raising a number of research questions concerning the operation of this process which are addressed in a following paper.

Commercial property loan valuations in the UK : implications of current trends in practice and liability

This paper is the second of two papers which aim to examine the major legal liability implications of changes to the commercial property loan valuation process caused by the recession in the UK property market and to make recommendations to valuers and their professional institutions to improve the quality of the process and the result. The objectives of this paper are to address a number of the practical implications of changes to the loan valuation process within the context of legal liability. The results of an interview survey of lenders and valuers are reported and analysed. The survey examined the loan valuation process including the selection and instruction of valuers, bases of valuation and valuation reporting. In the selection and instruction process, the findings of the survey reveal two potential problems within the valuer/lender relationship. First, valuers still occasionally accept instructions from borrowers and this could lead to a conflict of interest as lenders may rely on the survey. Second, the occasional lack of formal instructions prior to the delivery of reports casts doubt on the valuer’s ability to correctly identify the needs of clients. Regarding the basis of valuation, it was found that valuers are providing valuations on bases which they do not think are appropriate. Valuers may be legally liable if they do not inform clients of their reservations and this situation must be urgently addressed. The survey also confirms previous research that valuation reports are considered to be light on contextual information concerning markets. The paper concludes by making a number of specific recommendations concerning possible improvements to the commercial property loan valuation process.

Contributory negligence involving overseas European banks in property valuation negligence cases in the UK

This paper examines the phenomenon of cross-border property lending and examines a number of issues regarding lending procedures and decision making processes in the context of the relationship between lender and professional advisor. It commences by placing these procedures and processes in the context of the development of cross border European property investment and finance. The UK has been a popular destination for overseas investors and lenders over the last decade and is therefore used as a case study to examine the additional institutional risk that overseas lenders may face when operating outside of their own country and obtaining advice from home professionals. The UK market was the subject of a boom period during the late 1980s, followed by a recession in the early 1990s. The losses triggered a number of professional negligence actions by lenders against valuers. These include a number of overseas lenders mainly from Europe and these cases have been examined for any particular features which, coupled with other data gained from overseas lenders as part of an interview survey, could be used to isolate any significant problems for European lenders in overseas markets. The research identified a lack of clarity in roles and relationships between lender and advisor, difficulties in communications both internally and between overseas branches and headquarters and failures in provision and interpretation of advice. The paper concludes by identifying the issues which may need to be addressed generally by lenders and their advisors, when the lenders are operating in overseas markets.