Spatial concentration in institutional industrial real estate investment in the England and Wales

In two recent papers Byrne and Lee (2006, 2007) examined the geographical concentration of institutional office and retail investment in England and Wales at two points in time; 1998 and 2003. The findings indicate that commercial office portfolios are concentrated in a very few urban areas, whereas retail holdings correlate more closely with the urban hierarchy of England and Wales and consequently are essentially ubiquitous. Research into the industrial sector is very much less developed, and this paper therefore makes a significant contribution to understanding the structure of industrial property investment in the UK. It shows that industrial investment concentration is between that of retail and office and is focussed on LAs with high levels of manual workers in areas with smaller industrial units. It also shows that during the period studied the structure of the sector changed, with greater emphasis on the distributional element, for which location is a principal consideration.

Fixing the currency: analysing the implications for property investment performance

This paper analyses the historic effects of exchange rate movements on returns, risk and diversification of office markets within the Euro zone in order to gain insights into the investment consequences of conversion to a fixed rate currency regime. The data used in the study represents annual office rental growth rates for 22 European cities from nine European Union countries between 1985 and 1996. Relative performance is reported in terms of domestic currency and in terms of deutsche marks. The evidence presented suggests that Euro zone property investors in ‘southern’ countries are now protected from short term jump risk associated with flexible peg currency arrangements and medium/long-term currency volatility. Historically exchange rate movements have produced decreases in returns and increases in volatility. For northern ‘bloc’ cities, the effects of fixing the exchange rate are minimal. For these cities, national exchange rate fluctuations against the deutsche mark have been minor and the resultant implications for property risk and return to non-domestic SCA investors have been negligible. Moreover, although previous research would suggest that the effect of currency volatility is to decrease market correlation, this cannot be observed within the Euro zone.

International investment, ownership and risk in the City of London office market: an analysis of trends 1972-1997

Office returns in the City of London are more volatile than in other UK markets. This volatility may reflect fluctuations in capital flows associated with changing patterns of ownership and the growing linkage between real estate and financial markets in the City. Using current and historical data, patterns of ownership in the City are investigated. They reveal that overseas ownership has grown markedly since 1985, that owners are predominantly FIRE sector firms and that there are strong links between ownership and occupation. This raises concerns about future volatility and systemic risk.

Higher education as a portfolio investment: students’ choices about studying, term time employment, leisure, and loans

Recent UK changes in the number of students entering higher education, and in the nature of financial support, highlight the complexity of students’ choices about human capital investments. Today’s students have to focus not on the relatively narrow issue of how much academic effort to invest, but instead on the more complicated issue of how to invest effort in pursuit of ‘employability skills’, and how to signal such acquisitions in the context of a highly competitive graduate jobs market. We propose a framework aimed specifically at students’ investment decisions, which encompasses corner solutions for both borrowing and employment while studying.

A green profession? A global survey of RICS members and their engagement with the sustainability agenda

Purpose – This study seeks to provide a review of the background and context to the engagement of RICS members with the sustainability agenda, and to examine the extent to which the surveying profession uses relevant information, tools and techniques to achieve the key objectives of sustainable development (or sustainability). Design/methodology/approach – The paper analyses results from a major international online survey of 4,600 RICS respondent members, supported by 31 structured telephone interviews. Findings – The results suggest that, although sustainability is highly relevant to RICS members’ work, a lack of knowledge and expertise is making it more difficult for sustainability tools and other information to be used effectively. Research limitations/implications – The survey is based on a substantial number of responses which are broadly representative of the global RICS population. A key implication is that “laggard” faculties include the disciplines of commercial property and valuation. Practical implications – The research suggests that key stakeholders must work together to provide better information, guidance and education and training to “hardwire” the sustainability agenda across RICS faculties. Originality/value – This is the first truly global survey of its kind and focuses particularly on those faculties that play a major role in property investment and finance (i.e. valuation and commercial property), comparing their position with that of other faculties in an international context.

Design and management of sustainable built environments

The United Nation Intergovernmental Panel on Climate Change (IPCC) makes it clear that climate change is due to human activities and it recognises buildings as a distinct sector among the seven analysed in its 2007 Fourth Assessment Report. Global concerns have escalated regarding carbon emissions and sustainability in the built environment. The built environment is a human-made setting to accommodate human activities, including building and transport, which covers an interdisciplinary field addressing design, construction, operation and management. Specifically, Sustainable Buildings are expected to achieve high performance throughout the life-cycle of siting, design, construction, operation, maintenance and demolition, in the following areas: • energy and resource efficiency; • cost effectiveness; • minimisation of emissions that negatively impact global warming, indoor air quality and acid rain; • minimisation of waste discharges; and • maximisation of fulfilling the requirements of occupants’ health and wellbeing. Professionals in the built environment sector, for example, urban planners, architects, building scientists, engineers, facilities managers, performance assessors and policy makers, will play a significant role in delivering a sustainable built environment. Delivering a sustainable built environment needs an integrated approach and so it is essential for built environment professionals to have interdisciplinary knowledge in building design and management . Building and urban designers need to have a good understanding of the planning, design and management of the buildings in terms of low carbon and energy efficiency. There are a limited number of traditional engineers who know how to design environmental systems (services engineer) in great detail. Yet there is a very large market for technologists with multi-disciplinary skills who are able to identify the need for, envision and manage the deployment of a wide range of sustainable technologies, both passive (architectural) and active (engineering system),, and select the appropriate approach. Employers seek applicants with skills in analysis, decision-making/assessment, computer simulation and project implementation. An integrated approach is expected in practice, which encourages built environment professionals to think ‘out of the box’ and learn to analyse real problems using the most relevant approach, irrespective of discipline. The Design and Management of Sustainable Built Environment book aims to produce readers able to apply fundamental scientific research to solve real-world problems in the general area of sustainability in the built environment. The book contains twenty chapters covering climate change and sustainability, urban design and assessment (planning, travel systems, urban environment), urban management (drainage and waste), buildings (indoor environment, architectural design and renewable energy), simulation techniques (energy and airflow), management (end-user behaviour, facilities and information), assessment (materials and tools), procurement, and cases studies ( BRE Science Park). Chapters one and two present general global issues of climate change and sustainability in the built environment. Chapter one illustrates that applying the concepts of sustainability to the urban environment (buildings, infrastructure, transport) raises some key issues for tackling climate change, resource depletion and energy supply. Buildings, and the way we operate them, play a vital role in tackling global greenhouse gas emissions. Holistic thinking and an integrated approach in delivering a sustainable built environment is highlighted. Chapter two demonstrates the important role that buildings (their services and appliances) and building energy policies play in this area. Substantial investment is required to implement such policies, much of which will earn a good return. Chapters three and four discuss urban planning and transport. Chapter three stresses the importance of using modelling techniques at the early stage for strategic master-planning of a new development and a retrofit programme. A general framework for sustainable urban-scale master planning is introduced. This chapter also addressed the needs for the development of a more holistic and pragmatic view of how the built environment performs, , in order to produce tools to help design for a higher level of sustainability and, in particular, how people plan, design and use it. Chapter four discusses microcirculation, which is an emerging and challenging area which relates to changing travel behaviour in the quest for urban sustainability. The chapter outlines the main drivers for travel behaviour and choices, the workings of the transport system and its interaction with urban land use. It also covers the new approach to managing urban traffic to maximise economic, social and environmental benefits. Chapters five and six present topics related to urban microclimates including thermal and acoustic issues. Chapter five discusses urban microclimates and urban heat island, as well as the interrelationship of urban design (urban forms and textures) with energy consumption and urban thermal comfort. It introduces models that can be used to analyse microclimates for a careful and considered approach for planning sustainable cities. Chapter six discusses urban acoustics, focusing on urban noise evaluation and mitigation. Various prediction and simulation methods for sound propagation in micro-scale urban areas, as well as techniques for large scale urban noise-mapping, are presented. Chapters seven and eight discuss urban drainage and waste management. The growing demand for housing and commercial developments in the 21st century, as well as the environmental pressure caused by climate change, has increased the focus on sustainable urban drainage systems (SUDS). Chapter seven discusses the SUDS concept which is an integrated approach to surface water management. It takes into consideration quality, quantity and amenity aspects to provide a more pleasant habitat for people as well as increasing the biodiversity value of the local environment. Chapter eight discusses the main issues in urban waste management. It points out that population increases, land use pressures, technical and socio-economic influences have become inextricably interwoven and how ensuring a safe means of dealing with humanity’s waste becomes more challenging. Sustainable building design needs to consider healthy indoor environments, minimising energy for heating, cooling and lighting, and maximising the utilisation of renewable energy. Chapter nine considers how people respond to the physical environment and how that is used in the design of indoor environments. It considers environmental components such as thermal, acoustic, visual, air quality and vibration and their interaction and integration. Chapter ten introduces the concept of passive building design and its relevant strategies, including passive solar heating, shading, natural ventilation, daylighting and thermal mass, in order to minimise heating and cooling load as well as energy consumption for artificial lighting. Chapter eleven discusses the growing importance of integrating Renewable Energy Technologies (RETs) into buildings, the range of technologies currently available and what to consider during technology selection processes in order to minimise carbon emissions from burning fossil fuels. The chapter draws to a close by highlighting the issues concerning system design and the need for careful integration and management of RETs once installed; and for home owners and operators to understand the characteristics of the technology in their building. Computer simulation tools play a significant role in sustainable building design because, as the modern built environment design (building and systems) becomes more complex, it requires tools to assist in the design process. Chapter twelve gives an overview of the primary benefits and users of simulation programs, the role of simulation in the construction process and examines the validity and interpretation of simulation results. Chapter thirteen particularly focuses on the Computational Fluid Dynamics (CFD) simulation method used for optimisation and performance assessment of technologies and solutions for sustainable building design and its application through a series of cases studies. People and building performance are intimately linked. A better understanding of occupants’ interaction with the indoor environment is essential to building energy and facilities management. Chapter fourteen focuses on the issue of occupant behaviour; principally, its impact, and the influence of building performance on them. Chapter fifteen explores the discipline of facilities management and the contribution that this emerging profession makes to securing sustainable building performance. The chapter highlights a much greater diversity of opportunities in sustainable building design that extends well into the operational life. Chapter sixteen reviews the concepts of modelling information flows and the use of Building Information Modelling (BIM), describing these techniques and how these aspects of information management can help drive sustainability. An explanation is offered concerning why information management is the key to ‘life-cycle’ thinking in sustainable building and construction. Measurement of building performance and sustainability is a key issue in delivering a sustainable built environment. Chapter seventeen identifies the means by which construction materials can be evaluated with respect to their sustainability. It identifies the key issues that impact the sustainability of construction materials and the methodologies commonly used to assess them. Chapter eighteen focuses on the topics of green building assessment, green building materials, sustainable construction and operation. Commonly-used assessment tools such as BRE Environmental Assessment Method (BREEAM), Leadership in Energy and Environmental Design ( LEED) and others are introduced. Chapter nineteen discusses sustainable procurement which is one of the areas to have naturally emerged from the overall sustainable development agenda. It aims to ensure that current use of resources does not compromise the ability of future generations to meet their own needs. Chapter twenty is a best-practice exemplar - the BRE Innovation Park which features a number of demonstration buildings that have been built to the UK Government’s Code for Sustainable Homes. It showcases the very latest innovative methods of construction, and cutting edge technology for sustainable buildings. In summary, Design and Management of Sustainable Built Environment book is the result of co-operation and dedication of individual chapter authors. We hope readers benefit from gaining a broad interdisciplinary knowledge of design and management in the built environment in the context of sustainability. We believe that the knowledge and insights of our academics and professional colleagues from different institutions and disciplines illuminate a way of delivering sustainable built environment through holistic integrated design and management approaches. Last, but not least, I would like to take this opportunity to thank all the chapter authors for their contribution. I would like to thank David Lim for his assistance in the editorial work and proofreading.

Placentation and maternal investment in mammals

The mammalian placenta exhibits striking interspecific morphological variation, yet the implications of such diversity for reproductive strategies and fetal development remain obscure. More invasive hemochorial placentas, in which fetal tissues directly contact the maternal blood supply, are believed to facilitate nutrient transfer, resulting in higher fetal growth rates, and to be a state of relative fetal advantage in the evolution of maternal-offspring conflict. The extent of interdigitation between maternal and fetal tissues has received less attention than invasiveness but is also potentially important because it influences the surface area for exchange. We show that although increased placental invasiveness and interdigitation are both associated with shorter gestations, interdigitation is the key variable. Gestation times associated with highly interdigitated labyrinthine placentas are 44% of those associated with less interdigitated villous and trabecular placentas. There is, however, no relationship between placental traits and neonatal body and brain size. Hence, species with more interdigitated placentas produce neonates of similar body and brain size but in less than half the time. We suggest that the effects of placental interdigitation on growth rates and the way that these are traded off against gestation length may be promising avenues for understanding the evolutionary dynamics of parentoffspring conflict. Keywords: placenta, parent-offspring conflict, life history, brain evolution, reproductive strategies, gestation.

Experience and real estate investment decision-making: a process-tracing investigation

This study investigates the impact of experience upon trained behaviours in real estate investment decision‐making. In a controlled experiment design, two groups of subjects, experts and novices, conduct an evaluation and reach a decision about two investment options. Using a process‐tracing technique, each subject’s behaviour is observed and recorded. Differences between the groups are discovered in relation to some behaviour characteristics, but experience appears not to impact all behaviours. These findings are discussed in relation to the current absence of a universal normative model of real estate investment decision‐making. In an associated component of the study, the belief that monetary compensation is needed in order to render valid results from studies such as this is tested. We find this not to be the case.

Domestic and foreign bias in global real estate mutual fund investment allocations

The purpose of the study is to seek a better understanding of the investment allocation behaviour of the real estate mutual funds by focusing on asset allocation at the country level. Analysing the country allocation of 553 real estate mutual funds domiciled in 20 countries, we attempt to trace how investment bias exists across countries and affects their country allocations. Our results evidence the existence of disproportionate country allocation to their domestic markets (domestic bias) and to each foreign market (foreign bias). We also find each bias is influenced by different sets of variables: real estate market influences for domestic bias and familiarity influences for foreign bias. This difference in factors influential for each bias in part explains the conflated relationship between the two biases.

Can company-fund manager meetings convey informational benefits? Exploring the rationalisation of equity investment decision making by UK fund managers

Conventional economic theory, applied to information released by listed companies, equates ‘useful’ with ‘price-sensitive’. Stock exchange rules accordingly prohibit the selec- tive, private communication of price-sensitive information. Yet, even in the absence of such communication, UK equity fund managers routinely meet privately with the senior execu- tives of the companies in which they invest. Moreover, they consider these brief, formal and formulaic meetings to be their most important sources of investment information. In this paper we ask how that can be. Drawing on interview and observation data with fund managers and CFOs, we find evidence for three, non-mutually exclusive explanations: that the characterisation of information in conventional economic theory is too restricted, that fund managers fail to act with the rationality that conventional economic theory assumes, and/or that the primary value of the meetings for fund managers is not related to their investment decision making but to the claims of superior knowledge made to clients in marketing their active fund management expertise. Our findings suggest a disconnect between economic theory and economic policy based on that theory, as well as a corre- sponding limitation in research studies that test information-usefulness by assuming it to be synonymous with price-sensitivity. We draw implications for further research into the role of tacit knowledge in equity investment decision-making, and also into the effects of the principal–agent relationship between fund managers and their clients.

Aligning asset allocation and real estate investment: some lessons from the last cycle

Asset allocation is concerned with the development of multi--‐asset portfolio strategies that are likely to meet an investor’s objectives based on the interaction of expected returns, risk, correlation and implementation from a range of distinct asset classes or beta sources. Challenges associated with the discipline are often particularly significant in private markets. Specifically, composition differences between the ‘index’ or ‘benchmark’ universe and the investible universe mean that there can often be substantial and meaningful deviations between the investment characteristics implied in asset allocation decisions and those delivered by investment teams. For example, while allocation decisions are often based on relatively low--‐risk diversified real estate ‘equity’ exposure, implementation decisions frequently include exposure to higher risk forms of the asset class as well as investments in debt based instruments. These differences can have a meaningful impact on the contribution of the asset class to the overall portfolio and, therefore, lead to a potential misalignment between asset allocation decisions and implementation. Despite this, the key conclusion from this paper is not that real estate investors should become slaves to a narrowly defined mandate based on IPD / NCREIF or other forms of benchmark replication. The discussion suggests that such an approach would likely lead to the underutilization of real estate in multi--‐asset portfolio strategies. Instead, it is that to achieve asset allocation alignment, real estate exposure should be divided into multiple pools representing distinct forms of the asset class. In addition, the paper suggests that associated investment guidelines and processes should be collaborative and reflect the portfolio wide asset allocation objectives of each pool. Further, where appropriate they should specifically target potential for ‘additional’ beta or, more marginally, ‘alpha’.

The impact of buy to let residential investment on local housing markets: evidence from Glasgow, Scotland

The advent of the 'buy to let' (BTL) phenomenon in the UK. apart from producing a new wave of individualized rental market investment, has been widely judged to be a speculative and destabilizing force in the housing market. This paper provides a detailed empirical investigation of new residential investment in one city (Glasgow) where BTL has made a relatively large impact. In seeking to overcome data problems, the study employed qualitative (expert interviews and a landlord survey) and quantitative methods (census, the Register of Sasines, standardized house price information and modelling thereof) in order to assess the nature and scale of BTL, the motivations of investors and its impact on the private housing market. The evidence suggests that white Glasgow is in many re.spects different to rental markets elsewhere in the UK and although the investment has thus far largely occurred in a benign environment, the context for future investment, on balance, looks sustainable (i.e.favourable changes to pension planning law and the maturing market for BTL}. Long-term market impact is an empirical question that depends on the specific interactions of market niches or segments (i.e. the first-time buyer market for apartments} with potential buy to let investment. Our conclusion, to borrow a Scottish legal term, is that BTL induced volatility is 'not proven'.