The Finance Act 1998: 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 Budget of March 1998 and contained in the Finance Act 1998. The immediate 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.

Change & flexibility: the role of serviced office space in corporate real estate portfolios and office markets

With the increasing pace of change, organisations have sought new real estate solutions which provide greater flexibility. What appears to be required is not flexibility for all uses but appropriate flexibility for the volatile, risky and temporal part of a business. This is the essence of the idea behind the split between the core and periphery portfolio. The serviced office has emerged to fill the need for absolute flexibility. This market is very diverse in terms of the product, services and target market. It has grown and gained credibility with occupiers and more recently with the property investment market. Occupiers similarly use this space in a variety of ways. Some solely occupy serviced space while others use it to complement their more permanent space. It therefore appears that the market is fulfilling the role of providing periphery space for at least some of the occupiers. In all instances the key to this space is a focus on financial and tenurial flexibility which is not provided by other types of business space offered.

The conditional performance of UK property funds

The evaluation of investment fund performance has been one of the main developments of modern portfolio theory. Most studies employ the technique developed by Jensen (1968) that compares a particular fund's returns to a benchmark portfolio of equal risk. However, the standard measures of fund manager performance are known to suffer from a number of problems in practice. In particular previous studies implicitly assume that the risk level of the portfolio is stationary through the evaluation period. That is unconditional measures of performance do not account for the fact that risk and expected returns may vary with the state of the economy. Therefore many of the problems encountered in previous performance studies reflect the inability of traditional measures to handle the dynamic behaviour of returns. As a consequence Ferson and Schadt (1996) suggest an approach to performance evaluation called conditional performance evaluation which is designed to address this problem. This paper utilises such a conditional measure of performance on a sample of 27 UK property funds, over the period 1987-1998. The results of which suggest that once the time varying nature of the funds beta is corrected for, by the addition of the market indicators, the average fund performance show an improvement over that of the traditional methods of analysis.

Portfolio size and the reduction of dispersion: the case of the United Kingdom commercial real estate market

This paper investigates the potential benefits and limitations of equal and value-weighted diversification using as the example the UK institutional property market. To achieve this it uses the largest sample (392) of actual property returns that is currently available, over the period 1981 to 1996. To evaluate these issues two approaches are adopted; first, an analysis of the correlations within the sectors and regions and secondly simulations of property portfolios of increasing size constructed both naively and with value-weighting. Using these methods it is shown that the extent of possible risk reduction is limited because of the high positive correlations between assets in any portfolio, even when naively diversified. It is also shown that portfolios exhibit high levels of variability around the average risk, suggesting that previous work seriously understates the number of properties needed to achieve a satisfactory level of diversification. The results have implications for the development and maintenance of a property portfolio because they indicate that the achievable level of risk reduction depends upon the availability of assets, the weighting system used and the investor’s risk tolerance.

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

Community involvement in urban design: help or hindrance?

This paper examines the realities of community involvement in urban design in the context of a study of the West Itchen Neighbourhood of Southampton, a diverse inner city area accommodating some 7,000 households and 18,000 people. The findings are based on a literature review of community involvement in urban design and case study research into three government supported regeneration projects all located within the study area: a Neighbourhood Renewal Area - designated in 1994; an Estate Action Scheme - implemented between 1993 and 1996; and a Single Regeneration Budget programme - following a successful bid in 1995. The research was undertaken by Helen Gregory in 1997/8 as the basis of a dissertation, supervised by Alan Rowley, submitted for the award of an MPhil in Environmental Planning and Development from The University of Reading.

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.

Risk reduction and real estate portfolio size

Despite a number of papers that discuss the advantages of increased size on risk levels in real estate portfolios there is remarkably little empirical evidence based on actual portfolios. The objective of this paper is to remedy this deficiency by examining the portfolio risk of a large sample of actual property data over the period 1981 to 1996. The results show that all that can be said is that portfolios of properties of a large size, on the average, tend to have lower risks than small sized portfolios. More importantly portfolios of a few properties can have very high or very low risk.

Data interpretation in social housing management

The use of business management techniques in the public sector is not a new topic. However the increased use of the phrase "housing business management" as against that of "housing administration" reflects a change in the underlying philosophy of service delivery. The paper examines how data collection and use can be related to the operational requirements of the social landlords and highlights the problems of systems dynamics generating functionally obsolete data.

Horses in the countryside: conflict or cooperation?

Recognising the growing significance of sport and recreation in the countryside, this paper seeks to examine the changing demand for, and supply of, opportunities for horse riding in the countryside. It considers the physical problems associated with horse riding, together with the changing social context. The paper considers possible solutions to the issues raised, both within existing rights of way legislation and via new opportunities created by the revisions to agricultural support that have occurred in the last decade. The paper concludes that while the new opportunities have ameliorated some of the problems associated with the supply of land for horse riding, no new rights of access have been conferred. The ability of horse riders to guarantee continued provision will be governed partially by the market but also by future agricultural support policy.

Paradise postponed? The Department of National Heritage and political hegemony

Established following the Conservative Party's election victory in April 1992, the Department of National Heritage has been heralded as an important stage in the growing recognition of the significance of the leisure industry to Britain. By combining, for the first time, responsibility for sport, tourism, the arts, libraries, heritage, broadcasting and film, and by providing them with Cabinet representation, a unique opportunity has, seemingly, been provided to develop and promote the interests of leisure in Britain. This paper takes the view that although this initiative has been broadly welcomed, there are important inconsistencies which require attention. On the one hand the selection of the portfolio appears somewhat eclectic. On the other hand, it is questionable why such a department should have been developed at all. An inspection of the implicit ideology suggests that rather than the traditional use of the state to promote leisure interests, the introduction of the department signifies a shift to the use of leisure to promote the Government's interests. Thus the new Department of National Heritage is to be used as a central feature in the legitimation of the government's political programme. Rather than emphasising its traditional quasi-welfare role, the new place for leisure and heritage is firmly in the market economy. Whilst a leisured society may be the epitome of post-industrialism, therefore, the citizen rights claim for access to leisure activities can only be secured by engaging with the market. This legitimised construction of post- modern citizenship is at the centre of a new political order where choice has been replaced by means and where the classless paradigm championed by the Prime Minister will be a classlessness of constructed omission.

Forward pricing and the housing market: the pre-sales housing system in Taiwan

In countries that have experienced rapid economic development, the need to establish more efficient markets in which private property can be constructed has induced some innovative solutions. One such solution is the phenomenon of a pre-sales market of the kind that can be observed in Taiwan, Korea, and more recently in China. Developers sell their property before building is started in order to acquire financing for the development companies. This paper discusses the process and, by recognising the analogy between the pre-sales market and forwards markets, analyses the implications for developers

Ideology, centralisation and urban planning in Britain and Sweden

This paper outlines the main elements of the Thatcherist ideology focusing on the process of centralisation. The implications of this process for British local government and planning are explored. Attention then turns to Sweden with a discussion of the consensus culture and decentralisation policy. Again the implications for planning are pursued with an emphasis on the 'negotiation' style of planning which has emerged in recent years. The concluding section compares the two experiences and notes many similarities notwithstanding the different ideological contexts.