Retention rates, re-investment and depreciation in European office markets

The retention rate of a company has an impact on its earnings and dividend growth. Lease structures and performance measurement practice force real estate investment managers to adopt full distribution policies. Does this lead to lower income growth in real estate? This paper examines several European office markets across which the effective retention rates vary. It then compares depreciation rates across these markets. It is concluded that there is evidence of a relationship between retention and depreciation. Those markets with particularly inflexible lease structures exhibit low retention rates and higher levels of rental value depreciation. This poses interesting questions concerning the appropriate way to measure property performance across markets exhibiting significantly different retention rates and also raises important issues for global investors.

Private investment in the countryside: an assessment of the role of new houses and estates in sustaining the rural economy and environment

The British countryside has been shaped and sustained over the years by the establishment of landed estates. Some of our best known, and now most protected, landmarks derive from this tradition by which money, that was often sourced from outside the rural economy, was invested in land. Whilst there was some reversal in this trend during the last century, there is again a widespread desire among people of means to invest in new country property. Paragraph 3.21 of Planning Policy Guidance Note 7: The Countryside - Environmental Quality and Economic and Social Development was introduced in 1997 as a means of perpetuating the historic tradition of innovation in the countryside through the construction of fine individual houses in landscaped grounds. That it was considered necessary to use a special provision of this kind reflects the prevailing presumption of planning authorities against allowing private residential development in open countryside. The Government is currently reviewing rural planning policy and is focusing on higher density housing, affordable homes and the use of brownfield sites. There is an underlying conception that individual private house developments contribute nothing and are seen as the least attractive option for most development sites. The purpose of paragraph 3.21 lies outside the government’s priorities and its particular provisions may therefore be excluded in forthcoming ‘policy statements’. This paper seeks to examine the role of private investors wishing to build new houses in the countryside, and the impact that that might have on local economies. It explores the interpretation placed on PPG7 through an investigation of appeal sites, and concludes by making recommendations for the review process, including the retention of some form of exceptions policy for new build houses.

The transition of the Polish real estate market within a Central and Eastern European context

The real estate market in Poland is a relatively immature market, but one that has been experiencing substantial transformation. The development of the market has been encouraged by a number of factors, including changes arising as a result of new legislation and the migration of capital between capital markets. The progress of the real estate sector towards a western style competitive market has taken place within the gradual transformation of the Polish economy into a free market economy. As investment grade property is in relatively short supply in Poland, investors consider opportunities within the wider CEE block. An analysis of the risk-return characteristics of the three largest CEE real estate markets namely, Poland, Hungary and Czech Republic, shows that the returns in these markets have been negatively correlated with the UK. As these economies and markets evolve, and being part of the wider EU trading block, their economic performance will slowly converge and become more synchronized with their western counterparts. However, the catch-up of the CEE markets to western European performance cycles will be protracted and consequently there are likely to be significant ongoing portfolio risk reduction opportunities