Real Estate & the New Economy: The Impact of Information and Communications Technology

Private sector commercial property represents some #400 bn, or 34% of total UK business assets and is a vital fabric for housing commercial enterprise. Yet social and economic forces for change, linked with new technology, are making owners and occupiers question the very nature and purpose of property and real estate.

Lessons from real estate partnerships in the UK: Drivers, barriers and critical success factors

Purpose ��� This paper seeks to summarise the main research findings from a detailed, qualitative set of structured interviews and case studies of Real Estate Partnership (REP) schemes in the UK, which involve the construction of built facilities. The research, which was funded by the Foundation for the Built Environment, examines the evolution of REPs in the UK and in Europe. The paper also aims to analyse best practice, critical factors for success, and lessons for the future. Design/methodology/approach ��� The research in this paper is based around ten semi-structured interviews conducted with senior representatives from corporate occupiers, property consultants, legal practices and REP service providers. Findings ��� The research in the paper demonstrates that REPs are particularly suited to the UK, where lease lengths are relatively long, and the level of corporate real estate owner-occupation is often higher than elsewhere. It also shows that further research is needed to examine the future shape and form of the UK REP market. Research limitations/implications ��� The paper is based on a limited number of in-depth case study interviews. The paper shows that further research is needed to find better ways to examine REPs empirically. Practical implications ��� The paper is important in highlighting a number of main issues in developing REPs: identifying with occupier's objectives; risk transfer and size of contract; and developing appropriate innovation and skills. Originality/value ��� The paper examines the drivers, barriers and critical success factors (at strategic and operational levels) for REPs in the UK in detail and will be of value to property managers, facilities managers, investors, financiers, and others involved in the REP process.

The tenant as a customer: can good service improve real estate performance?

Customer Relationship Management (CRM) theory suggests that good customer service results in satisfied customers, who in turn are more likely to remain loyal and recommend the service provider to others. Proponents of good customer service for tenants claim that landlords should see a return on any investment in their customer service, in the form of enhanced real estate performance. This paper begins by reviewing research on customer service returns in other industries. Through consideration of the characteristics of real estate markets, the paper explains how factors such as (inter alia) lease terms, property market cycles, and property type, might determine the relationship between customer service and real estate performance. The paper concludes that further research is needed to isolate specific aspects of customer service that are most appreciated by customers. It suggests that the financial returns which accrue to landlords adopting a customer-focused approach might indeed be quantified, and suggests an appropriate method for such future research.

The role of serviced offices in the corporate real estate supply chain

The paper analyses the evolving corporate real estate supply chain and the interaction of this evolution with emerging business models in the serviced office sector. An enhanced model of the corporate real estate portfolio is first presented incorporating vacant, alienated and transitory space. It is argued that the serviced office sector has evolved in response to an increasingly diverse corporate real estate portfolio. For the peripheral corporate real estate portfolio, the core serviced workspace product provides the ability to rapidly acquire high-quality workspace and associated support services on very flexible bases. Whilst it is arguably a beta product, the core workspace offer is now being augmented by managed office or back-to-back leases which enables clients to complement the advantages of serviced offices with a wider choice of premises. Joint venture business models are aligned with solutions to problems of vacant space.

Treating the Tenant as a Customer: can good service improve real estate performance?

Customer Relationship Management (CRM) theory suggests that good customer service results in satisfied customers, who in turn are more likely to remain loyal and recommend the service provider to others. Applied to real estate, this theory implies that landlords should see a return on any investment in the service they give to tenants, in the form of increased lease renewal rates and fewer void periods, achieved without compromising rents. This paper examines determinants of occupier satisfaction, and investigates the relationship between occupier satisfaction and property performance, using measures such as capital growth, income return, lease renewal rates and total return. The analysis is based upon a pilot study using occupier satisfaction responses from around 2500 interviewees based in multi-tenanted offices, shopping centres and retail warehouses on out-of-town retail parks in the UK. The analysis is being extended to cover a larger sample for the author���s PhD. Part 1 of the analysis examines occupier satisfaction, whilst Part 2 considers its impact on property performance.

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.

Does foreign investment affect US office real estate prices?

his article examines the impact of foreign real estate investment on U.S. office market capitalization rates. The geographic unit of analysis is MSA and the time period is 2001���2013. Drawing upon a database of commercial real estate transactions, the authors model the determinants of market capitalization rates with a particular focus on the significance of the proportion of market transactions involving foreign investors. Employing several econometric techniques to analyze the data, the results suggest statistically significant effects of foreign investment across 38 U.S. metro areas. It is estimated that, all else equal, a 100 basis point increase in foreign share of total investment in a U.S. metropolitan office market causes about an 8 basis point decrease in the market cap rate.

Can institutional investors bias real estate portfolio appraisals? Evidence from the market downturn

This paper investigates the extent to which institutional investors may have influenced independent real estate appraisals during the financial crisis. A conceptual model of the determinants of client influence on real estate appraisals is proposed. It is suggested that the extent of clients��� ability and willingness to bias appraisal outputs is contingent upon market and regulatory environments (ethical norms and legal and institutional frameworks), the salience of the appraisal(s) to the client, financial incentives for the appraiser to respond to client pressure, organisational culture, the level of moral reasoning of both individual clients and appraisers, client knowledge and the degree of appraisal uncertainty. The potential of client influence to bias ostensibly independent real estate appraisals is examined using the opportunity afforded by the market downturn commencing in 2007 in the UK. During the market turbulence at the end of 2007, the motivations of different types of owners to bias appraisals diverged clearly and temporarily provided a unique opportunity to assess potential appraisal bias. We use appraisal-based performance data for individual real estate assets to test whether there were significant ownership effects on performance during this period. The results support the hypothesis that real estate appraisals in this period reflected the differing needs of clients.

Firm Market Performance and Volatility in a National Real Estate Sector

We present empirical evidence using daily data for stock prices for 17 real estate companies traded in the Sao Paulo, Brazil stock exchange. from August 26, 2006 to March 31, 2010. We use the U.S. house price bubble, financial crisis and risk measures to instrument for momentums and reversals in the domestic real estate sector. We find evidence of conditional premium persistence and conditional volatility persistence in the market. We find that the conditional risk-return relationship in the sector is consistent with the prospect theory of risk attitudes in this period. Certain companies seem to be operating on a perceived potential industry return above the target, while most others are below the target, and the whole sector is below target on average. (C) 2011 Elsevier Inc. All rights reserved.

Who has really paid for the Reconstruction of East Germany? Expected and Realized Returns on Real Estate Investments in East and West Germany in the 1990s

We evaluate the profitability of investments in residential property in Germany after unification with a focus on the comparison of East and West Germany. Calculations are carried out for (1) the after-tax return an investor might have expected at the beginning of the 1990s, and (2) the after-tax return that has been realized ten years after. We compare a set of statistical data for investments in fifty major cities by using complete financial budgeting. The results show that tax subsidies could not always protect investors from losing money, but they have boosted realized returns after tax considerably. Therefore, it was indeed the taxpayers, not the investors, who have borne the cost of reconstructing East Germany.

Economies of Scale and Cost Efficiencies: A Panel-Data Stochastic-Frontier Analysis of Real Estate Investment Trusts

This paper extends the existing research on real estate investment trust (REIT) operating efficiencies. We estimate a stochastic-frontier panel-data model specifying a translog cost function, covering 1995 to 2003. The results disagree with previous research in that we find little evidence of scale economies and some evidence of scale diseconomies. Moreover, we also generally find smaller inefficiencies than those shown by other REIT studies. Contrary to previous research, the results also show that self-management of a REIT associates with more inefficiency when we measure output with assets. When we use revenue to measure output, selfmanagement associates with less inefficiency. Also contrary with previous research, higher leverage associates with more efficiency. The results further suggest that inefficiency increases over time in three of our four specifications.

Diretrizes para o estabelecimento de parcerias entre empresas do real estate residencial.

O presente trabalho tem como foco o estudo e an��lise das alian��as estrat��gicas realizadas entre empresas do setor do real estate, no per��odo entre 2006 e 2010, enfatizando as alian��as realizadas entre empresas atuantes predominantemente nas cidades de S��o Paulo e Rio de Janeiro com empresas atuantes nas regi��es Norte e Nordeste do Brasil, cujo objetivo por parte das empresas paulistas foi o espalhamento geogr��fico. Considerando o volume representativo de alian��as estrat��gicas verificado no setor no per��odo em quest��o e a gera����o de resultados dos empreendimentos objetos de tais parcerias inferiores ��s expectativas estabelecidas, o objetivo do trabalho �� a apresenta����o de um conjunto de diretrizes que possa contribuir para o planejamento, realiza����o e condu����o de futuras parcerias entre empresas do setor, visando a mitigar dificuldades e a explorar da melhor forma poss��vel os benef��cios que as alian��as estrat��gicas podem proporcionar. Para tanto, realizou-se uma pesquisa por meio de um estudo de casos m��ltiplos abrangendo o estudo de empresas de capital aberto que atuavam predominantemente nas capitais do eixo Rio-S��o Paulo, empresas atuantes em n��vel regional no Norte e Nordeste brasileiro que realizaram parcerias com as empresas do Sudeste, al��m de empresas de consultoria que estiveram envolvidas nas parcerias por meio de presta����o de servi��os. Tal pesquisa permitiu identificar as principais dificuldades, vantagens e desvantagens decorrentes das parcerias em quest��o, cujos dados foram analisados e discutidos �� luz da revis��o bibliogr��fica, embasando assim o conjunto de diretrizes proposto. As diretrizes apresentadas visam a contribuir com todo o processo que envolve a realiza����o de uma parceria, contemplando desde aspectos de planejamento, gest��o at�� aspectos operacionais e s��o complementadas por recomenda����es que somadas ��s diretrizes podem elevar a probabilidade de ��xito das parcerias.

An��lise da poss��vel expans��o internacional de empresas brasileiras de real estate residencial para o mercado costarriquenho, uma abordagem SWOT.

Devido ao crescimento e �� experi��ncia adquirida pelas empresas brasileiras de real estate residencial nos ��ltimos anos, e ��s caracter��sticas pr��prias desse setor, os mercados internacionais poderiam ser considerados como poss��veis alvos para essas empresas. Por exemplo, no mercado residencial costarriquenho, incentivos para projetos residenciais de alta densidade populacional, reformas nos processos para a obten����o dos alvar��s de constru����o e mudan��as demogr��ficas e culturais, parecem propiciar um ambiente favor��vel para empresas dessa ind��stria. Portanto, o objetivo do presente trabalho �� estudar uma poss��vel expans��o geogr��fica de empresas brasileiras de real estate no mercado residencial costarriquenho, a partir da estrutura����o de uma an��lise de abordagem SWOT dos elementos necess��rios para tal incurs��o. Para isso, realizou-se uma revis��o bibliogr��fica na busca dos elementos estrat��gicos do ambiente interno de empresas de real estate residencial que devem ser considerados para processos de internacionaliza����o, identificando-se 12 for��as e 10 fraquezas desta revis��o. Ademais, analisou-se: o mercado residencial; a macroeconomia, e as conjunturas pol��tico-legais e socioculturais da Costa Rica, na procura de fatores que devem ser tomados em conta por parte de empresas de real estate ao ingressar nesse pa��s, distinguindo-se 24 oportunidades e 20 amea��as dessa an��lise. Para complementar o estudo, foi avaliada a atratividade do mercado residencial costarriquenho para receber investimentos por onze importantes empresas do setor de real estate residencial brasileiro, por meio de um question��rio estruturado com os elementos identificados na primeira parte do trabalho. Os resultados mostraram que, no momento da avalia����o, as empresas entrevistadas deram maior aten����o ao tamanho do mercado e ��s caracter��sticas do sistema financeiro para o setor residencial, e identificaram a car��ncia do conhecimento local e sua cultura empresarial, como os elementos que dificultariam sua internacionaliza����o. Conclui-se sobre a poss��vel internacionaliza����o de empresas brasileiras de real estate residencial para o mercado da Costa Rica, que elementos desde uma perspectiva econ��mica racional e principalmente contingencial definem essa estrat��gia, n��o sendo vi��vel nem vantajoso idealizar um processo de internacionaliza����o nesse mercado, devido ��s atuais condi����es de seus mercados locais e aos elementos do ambiente interno que v��rias dessas empresas apresentam.

Building bridges��� and properties aplenty: cultural problems in Spanish real estate marketing for prospective British buyers

N.B. reproduced with permission of Peter Lang Verlag. For citation, please, use the original reference, that is Campos Pardillos, M.A. and Balteiro Fern��ndez, I. 2009. ���Building bridges��� and properties aplenty: cultural problems in Spanish real estate marketing for prospective British buyers���. In: Guill��n-Nieto, V., C. Marim��n-Llorca and C. Vargas-Sierra. Eds. Intercultural Business Communication and Simulation and Gaming Methodology. Bern: Peter Lang. Pp. 155-174.