Another look at the relative importance of sectors and regions in determining property returns

This paper re-examines the relative importance of sector and regional effects in determining property returns. Using the largest property database currently available in the world, we decompose the returns on individual properties into a national effect, common to all properties, and a number of sector and regional factors. However, unlike previous studies, we categorise the individual property data into an ever-increasing number of property-types and regions, from a simple 3-by-3 classification, up to a 10 by 63 sector/region classification. In this way we can test the impact that a finer classification has on the sector and regional effects. We confirm the earlier findings of previous studies that sector-specific effects have a greater influence on property returns than regional effects. We also find that the impact of the sector effect is robust across different classifications of sectors and regions. Nonetheless, the more refined sector and regional partitions uncover some interesting sector and regional differences, which were obscured in previous studies. All of which has important implications for property portfolio construction and analysis.

Learning across business sectors: context, embeddedness and conceptual chasms

While the construction industry is frequently encouraged to learn from other business sectors, the difficulties of transferring knowledge from one context to another are rarely acknowledged. The problematic nature of knowledge is addressed with particular emphasis on the concept of contextual embeddedness. From this point of view, the process of 'knowledge transfer' depends upon a prolonged process of socialization between actors from both the 'receiving' and 'sending' contexts networking. It is contended that a significant conceptual chasm exists between the exhortations of industry leaders to learn from other sectors and the theoretical complexities associated with knowledge transfer. An ongoing research project is described that seeks to facilitate knowledge sharing between construction and aerospace. A novel approach to knowledge sharing based upon soft systems methodology (SSM) (Mode 2) is described and justified. Initial findings from the first cycle of the research are discussed and used to highlight the importance of context in the implementation of supply chain management.

Winners and losers from industry reforms in the developing world: experiences from the electricity and mining sectors

The reform of previously state-owned and operated industries in many Less Developed Countries (LDCs) provide contrary experiences to those in the developed world, which have generally had more equitable distributional impacts. The economic reform policies proposed by the so-called 'Washington Consensus' state that privatisation provides governments with opportunities to raise revenues through the sale of under-performing and indebted state industries, thereby reducing significant fiscal burdens, and, at the same time, facilitating influxes of foreign capital, skills and technology, with the aim of improving operations and a "trickle-down" of benefits. However, experiences in many LDCs over the last 15-20 years suggest that reform has not solved the problem of chronic public-sector debt, and that poverty and socio-economic inequalities have increased during this period of 'neo-liberal' economics. This paper does not seek to challenge the policies themselves, but rather argues that the context in which reform has often taken place is of fundamental significance. The industry-centric policy advice provided by the IFIs typically causes a 'lock-in' of inequitably distributed 'efficiency gains', providing minimal, if any, benefits to impoverished groups. These arguments are made using case study analysis from the electricity and mining sectors.

Dynamic correlations across REIT sub-sectors

The issue of whether Real Estate Investment Trusts should pursue a focused or diversified investment strategy remains an ongoing debate within both the academic and industry communities. This paper considers the relationship between REITs focused on different property sectors in a GARCH-DCC framework. The daily conditional correlations reveal that since 1990 there has been a marked upward trend in the coefficients between US REIT sub-sectors. The findings imply that REITs are behaving in a far more homogeneous manner than in the past. Furthermore, the argument that REITs should be focused in order that investors can make the diversification decision is reduced.

Style analysis in real estate markets: beyond the sectors and regions dichotomy

While style analysis has been studied extensively in equity markets, applications of this valuable tool for measuring and benchmarking performance and risk in a real estate context are still relatively new. Most previous real estate studies on this topic have identified three investment categories (rather than styles): sectors, administrative regions and economic regions. However, the low explanatory power reveals the need to extend this analysis to other investment styles. We identify four main real estate investment styles and apply a multivariate model to randomly generated portfolios to test the significance of each style in explaining portfolio returns. Results show that significant alpha performance is significantly reduced when we account for the new investment styles, with small vs. big properties being the dominant one. Secondly, we find that the probability of obtaining alpha performance is dependent upon the actual exposure of funds to style factors. Finally we obtain that both alpha and systematic risk levels are linked to the actual characteristics of portfolios. Our overall results suggest that it would be beneficial for real estate fund managers to use these style factors to set benchmarks and to analyze portfolio returns.

The relative importance of sectors v's regions in determining property returns

A number of studies have investigated the benefits of sector versus regional diversification within a real estate portfolio without explicitly quantify the relative benefits of one against the other. This paper corrects this omission by adopting the approach of Heston and Rouwenhorst (1994) and Beckers, Connor and Curds (1996) on a sample of 187 property data points using annual data over the period 1981-1995. The general conclusion of which is the sector diversification explains on average 22% of the variability of property returns compared with 8% for administratively defined regions. A result in line with previous work. Implying that sector diversification should be the first level of analysis in constructing and managing the real estate portfolio. However, unlike previous work functionally defined regions provide less of an explanation of regional diversification than administrative regions. Which may be down to the weak definition of economic regions employed in this study.

Dynamic correlations between REIT sub-sectors and the implications for diversification

The issue of whether Real Estate Investment Trusts (REITs) should pursue a focused or diversified investment strategy remains an ongoing debate within both the academic and industry communities. This article considers the relationship between REITs focused on different property sectors in a Generalized Autoregressive Conditional Heteroscedasticity-Dynamic Control Correlation (GARCH-DCC) framework. The daily conditional correlations reveal that since 1990 there has been a marked upward trend in the coefficients between US REIT sub-sectors. The findings imply that REITs are behaving in a far more homogeneous manner than in the past. Furthermore, the argument that REITs should be focused in order that investors can make the diversification decision is reduced.

Assessment of surface winds over the Atlantic, Indian and Pacific Ocean sectors of the Southern Ocean in CMIP5 models: historical bias, forcing response, and state dependence

An assessment of the fifth Coupled Models Intercomparison Project (CMIP5) models’ simulation of the near-surface westerly wind jet position and strength over the Atlantic, Indian and Pacific sectors of the Southern Ocean is presented. Compared with reanalysis climatologies there is an equatorward bias of 3.7° (inter-model standard deviation of ± 2.2°) in the ensemble mean position of the zonal mean jet. The ensemble mean strength is biased slightly too weak, with the largest biases over the Pacific sector (-1.6±1.1 m/s, 27 -22%). An analysis of atmosphere-only (AMIP) experiments indicates that 41% of the zonal mean position bias comes from coupling of the ocean/ice models to the atmosphere. The response to future emissions scenarios (RCP4.5 and RCP8.5) is characterized by two phases: (i) the period of most rapid ozone recovery (2000-2049) during which there is insignificant change in summer; and (ii) the period 2050-2098 during which RCP4.5 simulations show no significant change but RCP8.5 simulations show poleward shifts (0.30, 0.19 and 0.28°/decade over the Atlantic, Indian and Pacific sectors respectively), and increases in strength (0.06, 0.08 and 0.15 m/s/decade respectively). The models with larger equatorward position biases generally show larger poleward shifts (i.e. state dependence). This inter-model relationship is strongest over the Pacific sector (r=-0.89) and insignificant over the Atlantic sector (r=-0.50). However, an assessment of jet structure shows that over the Atlantic sector jet shift is significantly correlated with jet width whereas over the Pacific sector the distance between the sub-polar and sub-tropical westerly jets appears to be more important.

Evaluation of the trade development strategies of UKTI Sectors Group: Stage 2

An evaluation of the activities of UK Trade & Investment's Sectors Group. It assessed the contribution of trade development activities to high-level objectives such as productivity growth and critically examined the rationale for interventions.

The olive oil and cotton lint sectors in the European Union

This paper examines and analyses the impacts of the reformed CAP as well as the decisions of the new round of negotiations for the olive oil and cotton sectors in the European Union. The aim of this study is to estimate changes in supply (agricultural supply plus intermediate demand and final production), demand (consumption), price and stock formation (import, export, beginning and ending stocks, national price formation) for both the olive oil and cotton sectors. The model designed for this purpose is partial equilibrium and policy oriented. The objectives of this model are to estimate changes in the production and consumption of the two products concerned, to determine how the reformed CAP and the new round of negotiations of the WTO affect these two sectors to analyse the evolution of export and import volumes, and finally to determine how this evolution will influence the welfare situation of the olive and cotton sectors.

The imprint of the interaction between dark sectors in galaxy clusters

Based on perturbation theory, we study the dynamics of how dark matter and dark energy in the collapsing system approach dynamical equilibrium when they are in interaction. We find that the interaction between dark sectors cannot ensure the dark energy to fully cluster along with dark matter. When dark energy does not trace dark matter, we present a new treatment on studying the structure formation in the spherical collapsing system. Furthermore we examine the cluster number counts dependence on the interaction between dark sectors and analyze how dark energy inhomogeneities affect cluster abundances. It is shown that cluster number counts can provide specific signature of dark sectors interaction and dark energy inhomogeneities.

A PRELIMINARY ANALYSIS OF THE ENERGY TRANSFER BETWEEN THE DARK SECTORS OF THE UNIVERSE

We study the mutual interaction between the dark sectors (dark matter and dark energy) of the Universe by resorting to the extended thermodynamics of irreversible processes and constrain the former with supernova type Ia data. As a by-product, the present dark matter temperature results are not extremely small and can meet the independent estimate of the temperature of the gas of sterile neutrinos.