Limited Partnerships and Reputation Formation

This paper analyzes the optimal quality decision of a producer in a multi-period setting with reputation effects. Using a unique database of returns on real estate limited partnerships (RELPs), we empirically examine alternative theoretical predictions of optimal producer strategy. In particular, we test whether the producers in our market invest in reputation building by initially selling high quality goods and then lowering quality. Using a variety of statistical tests, we find evidence consistent with reputation building, both in the aggregate and for individual developers.

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.

Private property vehicles: the valuation of interests in limited partnerships

This paper examines the extent to which the valuation of partial interests in private property vehicles should be closely aligned to the valuation of the underlying assets. A sample of vehicle managers and investors replied to a questionnaire on the qualities of private property vehicles relative to direct property investment. Applying the Analytic Hierarchy Process (AHP) technique the relative importance of the various advantages and disadvantages of investment in private property vehicles relative to acquisition of the underlying assets are assessed. The results suggest that the main drivers of the growth of the this sector have been the ability for certain categories of investor to acquire interests in assets that are normally inaccessible due to the amount of specific risk. Additionally, investors have been attracted by the ability to ‘outsource’ asset management in a manner that minimises perceived agency problems. It is concluded that deviations from NAV should be expected given that investment in private property vehicles differs from investment in the underlying assets in terms of liquidity, management structures, lot size, financial structure inter alia. However, reliably appraising the pricing implications of these variations is likely to be extremely difficult due to the lack of secondary market trading and vehicle heterogeneity.

The true cost and performance of individual residential property investment and the implication on real estate agency practice

Investment in residential property in Australia is not dominated by the major investment institutions in to the same degree as the commercial, industrial and retail property markets. As at December 2001, the Property Council of Australia Investment Performance Index contained residential property with a total value of $235 million, which represents only 0.3% of the total PCA Performance Index value. The majority of investment in the Australian residential property market is by small investment companies and individual investors. The limited exposure of residential property in the institutional investment portfolios has also limited the research that has been undertaken in relation to residential property performance. However the importance of individual investment in residential property is continuing to gain importance as both individuals are now taking control of their own superannuation portfolios and the various State Governments of Australia are decreasing their involvement in the construction of public housing by subsidizing low-income families into the private residential property market. This paper will: • Provide a comparison of the cost to initially purchase residential property in the various capital city residential property markets in Australia, and • Analyse the true cost and investment performance of residential property in the main residential property markets in Australia based on a standard investment portfolio in each of the State capital cities and relate these results to real estate marketing and agency practice.

Competitiveness factors : a study of the real estate market in China

The execution of 'macro-adjustment' policies by the central government to cool down the overheated real estate market in the past few years has created an unfavourable operating environment for real estate developers in Mainland China. Developers need to rethink their business model and create a new form of competitive advantage in order to survive. Despite this, research into the factors that influence the competitiveness of the real estate market in China has been limited. Therefore, a survey of 58 real estate actitioners, experts and academics in China was conducted to probe opinion on the factors that influence competitiveness in real estate firms in China. Survey results suggest that the developer's financial competency, market coverage and management competencies are vital to its competitiveness. Findings also highlight the importance of industry ecognition/award, share in different types of property sales/development projects, profit after tax, growth rate of their securities price, and diversification of R&D in reflecting the competitiveness of real estate developers in China. The findings provide an insight into the factors that influence competitiveness in China's real estate market and also assist practitioners to formulate competitiveness improvement strategies.

Key competitiveness indicators for new real estate developers

Purpose – The paper aims to explore the key competitiveness indicators (KCIs) that provide the guidelines for helping new real estate developers (REDs) achieve competitiveness during their inception stage in which the organisations start their business. Design/methodology/approach – The research was conducted using a combination of various methods. A literature review was undertaken to provide a proper theoretical understanding of organisational competitiveness within RED's activities and developed a framework of competitiveness indicators (CIs) for REDs. The Delphi forecasting method is employed to investigate a group of 20 experts' perception on the relative importance between CIs. Findings – The results show that the KCIs of new REDs are capital operation capability, entrepreneurship, land reserve capability, high sales revenue from the first real estate development project, and innovation capability. Originality/value – The five KCIs of new REDs are new. In practical terms, the examination of these KCIs would help the business managers of new REDs to effectively plan their business by focusing their efforts on these key indicators. The KCIs can also help REDs provide theoretical constructs of the knowledge base on organisational competitiveness from a dynamic perspective, and assist in providing valuable experiences and in formulating feasible strategies for survival and growth.

Globalisation and corporate real estate strategies

Purpose: The purpose of this paper is to examine the impact of globalisation on corporate real estate strategies. Specifically, it seeks to identify corporate real estate capabilities that are important in a hypercompetitive business climate. ---------- Design/methodology/approach: This paper utilises a qualitative approach to analyse secondary data in order to identify the corporate real estate capabilities for a hypercompetitive business environment. ---------- Findings: Globalisation today is an undeniable phenomenon that is fundamentally changing the way business is conducted. In the light of global hypercompetition, corporate real estate needs to develop new capabilities to support global business strategies. These include flexibility, network organization and managerial learning capabilities. ---------- Research limitations/implications: This is a conceptual paper and future empirical research needs to be conducted to verify the propositions made in this paper. ---------- Practical implications: Given the new level of uncertainty in the business climate, that is, hypercompetition, businesses need to develop dynamic capabilities that are harder for competitors to imitate in order to maintain what is considered a “momentary” competitive advantage. The findings of this paper are useful to guide corporate real estate managers in this regard. ---------- Originality/value:– This paper is original in two ways. First, it applies the strategic management concept of capabilities to corporate real estate. Second, it links the key challenge that businesses face today, i.e. globalisation, to the concept of capabilities as a means to maintain competitive advantage.

Key determinants of real estate service quality among renters and buyers

Purpose The purpose of this study is to compare quality perceptions of virtual servicescapes and physical service encounters among buyers and renters of real estate. Design/methodology/approach Qualitative data from a sample of 27 professionals engaged in higher education in the USA are gathered by recorded interview before being transcribed and imported into MAXQDA 2007 software for analytical coding. Findings Particular differences are found to exist between renters and buyers with regard to specific service attributes – for example, description of properties and type of visuals during the pre‐purchase stage, knowledge/experience and honest behavior of realtors during the service encounter stage and a continuous relationship with the realtor in the post‐encounter stage. Research limitations/implications Generalization of the results is limited because the study utilizes data from only one industry (real estate) and from only one demographic segment (professionals in higher education). Practical implications Real‐estate firms need to pay attention to both the training of agents and the design and content of their websites. Originality/value This paper contributes to knowledge regarding virtual servicescapes in professional services.

Investigating the concept of potential quality: An exploratory study in the real estate industry

Purpose The purpose of this research is to examine the concept of “potential quality” – that is, a company's tangible search qualities (such as the physical servicescape and virtual servicescape) – within the context of the real‐estate industry in the USA. Design/methodology/approach This qualitative study collects data by conducting personal in‐depth interviews with 34 respondents who had been recent buyers or renters of property. The data are then coded and themed to identify quality dimensions relevant to this industry. Findings The results indicate that a buyer's perception of the overall service quality of real‐estate service consists of two components: the interaction with a realtor (process quality); and the virtual servicescape, especially the firm's website design and content (potential quality). The study concludes that existing scales (such as SERVQUAL and RESERV) fail to capture the tangible component of service quality sufficiently in the real‐estate industry. Research limitations/implications The study uses data from only one industry (real estate) and from only one demographic segment (professionals in higher education). Practical implications Service providers of intangible, high‐contact services must appreciate the importance of the virtual servicescape as a surrogate quality indicator that can help to reduce information asymmetries and consumers' uncertainty with regard to initiating a business relationship. Real estate firms need to pay attention to the training of agents and the design and content of their e‐service systems. Originality/value This study integrates potential quality, process quality, and outcome quality in a comprehensive proposed model. In particular, the study identifies “potential quality” as a combination of the attributes of the virtual service environment and the physical service environment.

Pricing inefficiencies in private real estate markets using total return swaps

Efficient markets should guarantee the existence of zero spreads for total return swaps. However, real estate markets have recorded values that are significantly different from zero in both directions. Possible explanations might suggest non-rational behaviour by inexperienced market players or unusual features of the underlying asset market. We find that institutional characteristics in the underlying market lead to market inefficiencies and, hence, to the creation of a rational trading window with upper and lower bounds within which transactions do not offer arbitrage opportunities. Given the existence of this rational trading window, we also argue that the observed spreads can substantially be explained by trading imbalances due to the limited liquidity of a newly formed market and/or to the effect of market sentiment, complementing explanations based on the lag between underlying market returns and index returns.