Showing papers in "International Journal of Strategic Property Management in 2021"

Housing price cycles in Poland – the case of 18 provincial capital cities in 2000–2020

Abstract: Using a unique dataset of 4,5 million offers, the housing cycles in 18 Polish provincial capitals were identified between 2000 and 2020 before and after the financial crisis. Differences in the course of the cycles depending on spatial diversity are presented, as well as differences in the strength of decreases and increases in individual phases. The examined housing markets in Poland have experienced significant variability in the extent of their cycles. One complete cycle was found in each of the analysed cities. Its average duration was approximately 12 years. In this cycle, residential prices (in real terms) increased by 88% on average, in the upward phase by 158%, while in the downward phase, they decreased by 27% in the cities under study. A correlation was found that implies that the higher the price rises in the upward period, the higher the price correction ensues in the cycle’s downward phase. Moreover, the similarity in fluctuations was present in the metropolitan markets in local housing markets, especially before the financial crisis. Apartment prices continued to grow by 2.9% on average in the real term during the COVID-19 pandemic in 2020.

Exploring location determinants of asia’s unique beverage shops based on a hybrid madm model

Abstract: Identifying relevant location determinants is a good starting point for shop operators, help to increase profitability and, thus, avoiding business failure. Traditional Analytic Hierarchy Process (AHP) or the Analytic Network Process (ANP) have shortages that require improvement. Herein, Decision-Making Trial and Evaluation Laboratory (DEMATEL), ANP based on DEMATEL (DANP), and modified Vlse Kriterijumska Optimizacija I Kompromisno Resenje (modified VIKOR) are used to construct a hybrid multiple-attribute decision making (MADM) model, encompassing three dimensions and thirteen criteria in exploring the location determinants of Asia’s unique Bubble Tea Shops (BTSs) and to evaluate three preselected alternatives in Nanjing, China. The empirical findings of the DEMATEL method reveal that traffic traits (D1) and site traits (D2) are critical to BTSs, and that once these are enhanced, shop traits (D3) are also improved. Criteria deemed as important, based on the DEMATEL and DANP methodology, are (in descending order): proximity to a street corner (C2), proximity to public transportation systems (C1), road width (C3), proximity to communities (C5), proximity to commercial areas (C6), types of shop (C9), and proximity to schools (C7). Different decision-making rankings among alternatives are indicated based upon the modified VIKOR method and corresponding strategies for improvement are presented.

Understanding the Dynamic Behaviour of the Australian Retirement Village Industry: A Causal Loop Diagram

Abstract: The retirement village industry in Australia has been accommodating an increasing number of residents in recent decades. However, a thorough understanding of the dynamic behaviour of the industry remains largely unknown, which prevents a better prediction of its future growth. This study incorporates system dynamics thinking into residents' relocation decisions and aims to develop a causal loop diagram to have a full understanding of the complex interactions of variables affecting their relocation, which in turn determines the future growth pattern of the industry. Based on thematic analysis using literature review and interview data, five primary causal loops are identified, including the positive reinforcing loops of word-of-mouth effect and new-supply effect, and three negative balancing loops of the move-out effect, price effect and home-village distance effect. Of these five causal loops, the most dominant ones in determining the system behaviour are the word-of-mouth (reinforcing) and home-village distance (balancing) effects. The causal loop diagram provides a better understanding of the underlying structure of the retirement village industry and will help guide the industry and policy makers in formulating strategies to create a more ageing-friendly living environment for seniors in Australia.

Identifying and prioritizing the selection criteria of appropriate repair and maintenance methods for commercial buildings

Abstract: All buildings require Repair and Maintenance (R&M) in their life cycle period. However, if R&M activities are not carried out properly, deterioration will occur, service life of buildings will be reduced, and maintenance costs will increase. Hence, selecting the appropriate R&M methods is pivotal, especially for developing countries, such as Iran, which are featured by highly constrained resources. The present study aims to identify and prioritize the main criteria for selecting the suitable R&M methods for Commercial Buildings (CBs), which is considered as a profound challenge for the Architecture, Engineering and Construction/Facility Management (AEC/FM) industry. A total of 20 senior experts in the AEC/FM industry and CBs in Iran were invited to participate in a Delphi survey to solicit their perceptions and opinions on the selection criteria. The total number of individual criteria identified is 16, which are further divided into five categories: human resources, flexibility and technical capability, risks, cost of maintenance, together with facilities and technology. Then, the Fuzzy Analytic Hierarchy Process (FAHP) technique was applied to prioritize the identified criteria. Among the 5 main selection criteria, the cost of maintenance is the most important criterion for selecting appropriate R&M methods for CBs whereas the criterion of human resources (HR) was recognized as the least important.

Pension service institution selection by a personalized quantifier-based macont method

Abstract: With the emergence of a variety of pension service institutions, how to choose a suitable institution has become a strategic decision-making problem faced by pension service demanders. To solve this problem, this study identifies key evaluation criteria of pension service institutions through the analysis of the relevant literature. Then, this study proposes a mixed aggregation by comprehensive normalization technique (MACONT) with a personalized quantifier to select pension service institutions, where the personalized qualifier with cubic spline interpolation is used to derive the position weights of criteria, and the MACONT is improved to determine the ranking of alternatives. A case study about the selection of pension service institutions is provided to verify the feasibility of the proposed model. It is found that the proposed method is effective in dealing with heterogeneous evaluation information, and the personalized quantifiers can be combined with MACONT methods to obtain an optimal solution associated with the attitude of pension service demanders. The identified key evaluation criteria are not only significant for pension service demanders, but also conducive to the further improvement of property management related to pension services.

Influence of government credit risk on ppp projects in operation stage

Abstract: In PPP projects, insufficient risk management may lead to the breakdown of partnerships and even project failures. Among them, the government credit risk is regarded as unbearable risk and a key risk affecting PPP projects because of its high frequency and impact. Therefore, based on the contractual relationship between both sides, a principal-agent model for the optimal choice of investors and the government under the government default probability is constructed. This paper explored the quantity relationship of the government credit risk and the project utility through analysing the effect of government default probability perceived by both parties on the investor’s optimal effort level and government allocation ratio. The results demonstrate that the government credit risk will decrease the effort level of investors and have a negative impact on the utility of the project. Furthermore, the government’s modification of the contract allocation ratio based on its own credit rating can offset the negative impact of its credit risk on the effectiveness of the project. But this regulatory effect is limited. The findings effectively provide some insights and theoretical basis for solving the negative effects of government credit risk.

Productivity assessment of the real estate industry in china: a two-stage malmquist productivity index

Abstract: Considering that the real estate industry is a critical industry to promote the economy in China, it is necessary to measure the real estate performance. However, few studies about the performance evaluation of China’s real estate industry have focused on the production process. To fill this gap, this paper proposes a two-stage framework to investigate the real estate productivity of 30 sample provinces on mainland China from 2008 to 2015, based on a common-weight global Malmquist productivity index (MPI). The major findings are shown as follows: (a) the real estate efficiency is low, and it is mainly caused by the inefficiency in the sales stage, not the development stage; (b) the development trend of the real estate sector in China is sensitive to the government policies, and the fluctuations of MPI are consistent with the direction of policy adjustment during the observation period; (c) as for the regional analysis of MPI, we introduce the concept of the dependence degree of the economy on the real estate industry and predict that MPI in economically underdeveloped regions may decline in the future. Finally, policy recommendations are provided for the high-quality development of China’s real estate industry.

Building a strategic performance management model for enterprises investing to coastal urban projects toward sustainability

Abstract: In addition to the sustainable development of coastal areas, the success of local corporations investing in coastal urban projects is significantly affected by severe sea level rises and extreme disasters. Investment companies should plan which objectives need to target to reduce uncertainty in the early project stages, track project execution, and assess project output as projects complete the construction phase and start operational activities. To assist enterprises in planning, evaluating, and monitoring project performance aligning with vision and strategy, this study contributes a strategic management tool developed by integrating the Balanced Scorecard (BSC), Analytic Network Process (ANP), and Decision Making Trial and Evaluation Laboratory (DEMATEL) methods. A case study of a well-known investment corporation in Vietnam illustrates the research approach. This research appreciated stakeholder’s satisfaction as the main consequence and human resource as the most prominent cause of coastal urban projects. Furthermore, the proposed model for Vietnam in this study could be referred by other developing countries to facilitate companies to plan, measure, evaluate, and control the organizational performances for the coastal urban project success.

Understanding sellers’ agents in the residential property market

Abstract: Buyers in the property market often use an agent who is employed by the seller to assist their home searches. This unique and widely used agency arrangement in the property market is known as “sellers’ agents”. While principal-agent theory advocates that buyers should directly hire their agents (i.e., buyers’ agents) to do the home-hunting, search theory however implies that sellers would employ their agents (i.e., sellers’ agents) to increase the probability of the sale and selling prices. Although sellers’ agents and buyers’ agents are two very distinct institutions, many previous studies assume that their agency characteristics are identical and provide limited insights on how such a seemingly subtle but crucial agency arrangement affects transaction outcomes. Using transaction data from Wuhan China, this study disentangles the effects of the buyers’ and sellers’ agents on properties’ selling prices and their time on the market. The findings indicate that on average transactions conducted by sellers’ agents will be associated with a significant selling price premium of around 3.4%. As a critical test, we further show that the transactions completed by sellers’ agents with selling price premiums will have a shorter marketing time than those completed by buyers’ agents.

Predicting land prices and measuring uncertainty by combining supervised and unsupervised learning

Abstract: Despite the popularity deep learning has been gaining, measuring the uncertainty within the result has not met expectations in many deep learning applications and this includes property valuation. In real-world tasks, however, rather than simply requiring predictions, assurance of the certainty of the predictions is also demanded. In this study, supervised learning is combined with unsupervised learning to bridge this gap. A method based on principal component analysis, a popular tool of unsupervised learning, was developed and used to represent the uncertainty in property valuation. Then, a neural network, a representative algorithm to implement supervised learning, was constructed, and trained to predict land prices. Finally, the uncertainty that was measured using principal component analysis was incorporated into the price predicted by the neural network. This hybrid approach is shown to be likely to improve the credibility of the valuation work. The findings of this study are expected to generate interest in the integration of the two learning approaches, thereby promoting the rapid adoption of deep learning tools in the property valuation industry.

Establish a customer property service strategy framework

Abstract: The property management services sector in China is developing rapidly, contributing significantly to employment and income. We have made recommendations for service differentiation and low costs so that even with limited resources, property management services can distribute their services effectively, reduce unnecessary costs, and implement an optimal plan. This study helps property management service providers understand the needs and expectations of customers because it is a key factor contributing to the success of the business. Based on the consumer and service quality (SERVQUAL) theories, this study applies the fuzzy Delphi method (FDM) and the analytic hierarchy process (AHP) method to construct a quality evaluation scale for property management service companies and determine key property management service items that are valued most by customers and operators in this sector. The results show that it is feasible to determine accurately factors that are used to quantify the competitiveness of the existing market and identify improvements to ensure a win–win situation for both customers and companies in this sector.

The economic explainability of machine learning and standard econometric models-an application to the u.s. mortgage default risk

Abstract: This study aims to bridge the gap between two perspectives of explainability−machine learning and engineering, and economics and standard econometrics−by applying three marginal measurements. The existing real estate literature has primarily used econometric models to analyze the factors that affect the default risk of mortgage loans. However, in this study, we estimate a default risk model using a machine learning-based approach with the help of a U.S. securitized mortgage loan database. Moreover, we compare the economic explainability of the models by calculating the marginal effect and marginal importance of individual risk factors using both econometric and machine learning approaches. Machine learning-based models are quite effective in terms of predictive power; however, the general perception is that they do not efficiently explain the causal relationships within them. This study utilizes the concepts of marginal effects and marginal importance to compare the explanatory power of individual input variables in various models. This can simultaneously help improve the explainability of machine learning techniques and enhance the performance of standard econometric methods.

Can rainmakers justify their pay? the role of investment banks in reit m&as

Abstract: This study explicitly rejects the prima facie proposition that the top-tier investment banks are capable of delivering supernormal value creation to the shareholders of a REIT acquirer in a corporate acquisition. Using the event study method, we find that REIT acquirers advised by market-leading investment banks suffer an average cumulative abnormal return of −4.41% following the M&A announcement, whereas REIT acquirers advised by non-top-tier investment banks only suffer an average cumulative abnormal return of −1.49%. The evidence shows that the contemporary practice of employing investment banks based on the prestige of the advisory firms could potentially result in value-destroying M&As for the REIT acquirers.

Risk-return performances of real estate investment funds in turkey including the covid-19 period

Abstract: The purpose of this research is to give an insight into the Turkish real estate investment funds (T-REIFs) by comparing their risk-return performances with the main benchmark investment tool Istanbul Stock Exchange-100 (BIST-100) Index. This study evaluated the performance of T-REIFs in four different periods between January 2017 and December 2020 (2017m1–2017m12, 2018m1–2018m12, 2019m1–2019m12 and 2020m1–2020m12) including the Coronavirus Disease (Covid-19) period by applying the Sharpe and Treynor ratios. In a well-diversified portfolio both ratios give the same results, but in the presence of non-systematic risk and the portfolio is poorly diversified, the Treynor ratio is a better indicator than the Sharpe ratio. The findings of this study show that rankings of Sharpe and Treynor ratios may differ for each period. These results also support the fact that the portfolios of funds in the Turkish real estate market are not well diversified. By providing corporate tax exemptions, and by enabling the investors to diversify their investments and reduce their risks, real estate investment funds are important alternatives to direct real estate investments in Turkey. In that context, being one of the pioneer studies in this niche and a new topic in emerging markets, analyzing the return performances of T-REIFs and comparing them with the returns of the BIST-100 index is aimed to contribute to literature as well as provide insight to investors who may consider investing in the Turkish real estate capital market instruments. © 2021 The Author(s). Published by Vilnius Gediminas Technical University.

House prices, rental costs, and mortgage interest rates

Abstract: Studies have typically adopted the price-rent ratio to determine whether housing exuberance exists and the periods of imbalance between house prices and rental costs. Using the price-rent ratio to conduct tests without considering the effects of mortgage interest rates on user costs may overestimate episodes of exuberance. This study uses data of the overall housing market and those of 10 major metropolitan statistical areas (MSAs) in the United States from 1979Q1 to 2018Q1 to evaluate whether housing exuberance exists in the markets; the results indicate that all the MSAs experienced episodes of exuberance at different times and the overall housing U.S. market was overheated from 1998Q2 to 2007Q3. By considering mortgage rates and using the user-cost-rent ratio, we further determine that short-term housing exuberance emerged in only two MSAs, Los Angeles and Miami, in 2006Q2, which was followed by immediate corrections. Thus, the research results of this study signify that only use the price-rent ratio to determine whether or not rational housing tenure choice made by traders exists is not sufficient. This study provides evidence showing that the method incorporating mortgage interest rates tends to obtain an equilibrium relationship between the rental and housing markets, indicating interest rates play an important role in housing tenure choice. First published online 31 May 2021

How does the g20 summit affect land market? evidence from china

Abstract: We employ the difference-in-difference and synthetic control methods to investigate the capitalization effect of hosting the G20 Summit on land market, based on China’s land transaction dataset from 2011 to 2019. We find that hosting the G20 Summit has a significant positive effect on land prices in the host city, increasing land prices by over 22.6% compared to comparable cities. The impact of hosting the G20 Summit on land prices is larger in the post-G20 period than in the preparation period. Further, hosting the G20 Summit has heterogeneous and distributional effects on land prices. The capitalization effects of venue construction and transportation infrastructure upgrading on land prices are the main channels.

The inter-tier spread of housing bubbles: are luxury markets to blame?

Abstract: Understanding the spread of asset bubbles is pivotal to the effectiveness of risk management. This study thus estimates housing bubbles and investigates how and to what extent price bubbles spread between the tiers of luxury and mass housing in Hong Kong. The results show that price bubbles spread between housing tiers, the spreading of bubbles is not uni-directional from luxury to mass tiers, and more than 60% of bubbles come from inter-tier spreading. Moreover, bubble shocks from the luxury tier have stronger spreading influences on the movements of bubbles in the mass housing tier than the other way around during the period before the end of the global financial crisis (GFC), whereas the opposite is true for the period after GFC. The findings are important for policy makers attempting to tackle soaring housing bubbles, financial institutions seeking to managing lending risk, and housing investors wanting to time the submarkets.

Evaluation of cost-optimal retrofit investment in buildings: the case of bragança fire station, portugal

Abstract: Office buildings built before the entry into force of the first thermal regulation in 1991 constitute a relevant group for analysing the energy performance of the Portuguese building sector. A dynamic energy simulation was used to assess the energy performance of an existing office building located in the town of Braganca, Portugal. Four energy efficiency measures were selected and a financial evaluation through the internal rate of return (IRR) method was undertaken to choose the best retrofit option for improving the building’s energy performance. An investment package consisting of the roof insulation and a new equipment for the domestic hot water system presented an IRR higher than the discount rate used in the analysis, and, thus, a positive financial return. The results of the study also suggest that the EU’s comparative methodology framework is not particularly suitable for assessing building retrofit investment at the private investor’s perspective and further refinement in the cost-effective approach to renovations is needed to help stimulate building’s energy renovation market. Suggestions for further studies conducted for office buildings in the different climate zones in Portugal are also proposed.

Under invoicing in the residential real estate market in pakistan

Abstract: In this paper the meaning of “under invoicing in a real estate market” signifies that the market value of real property exceeds its record value appearing in government documentation. The purpose of this study is to identify the level of under invoicing and determine the factors that affect the under invoicing in real estate markets in Pakistan. We apply OLS and Extreme Bounds Analysis techniques to test our propositions. The statistical sample consists of 338 real estate contracts. We find that under invoicing is determined by a multiplicity of factor. These include: the capital gains tax rate, the measurable amount of corruption in the economy, the risk-free rate, a buyer’s profession, the reputation of the local housing authority, and the degree of disequilibria in regional real estate markets. Our findings are consistent with four distinct hypotheses: (a) tax evasion hypothesis, (b) widening gap hypothesis, (c) a corruption hypothesis and (d) a signaling hypothesis. The evidence suggests that higher rates of taxation and a larger statistical incidence of corruption in markets tend to be associated with a greater probability of under-invoicing. The findings of the study have practical implications for those investors who are interested in real estate markets of emerging and developing economies.

Real option and vertical mixed-use development

Abstract: Vertical mixed-use development is a favourite choice in urban development in high-density Asian cities to increase the land use efficiency. The flexibility of construction timing and the restrictions by lease contracts in vertical mixeduse projects are usually different from horizontal ones and single-use properties. To improve the valuation for vertical mixed-use projects, this study re-examines the real option pricing model. Simultaneous development for different uses and a finite maximum waiting period are the major characteristics of these projects. An approach is introduced to determine whether to develop a mixed-use project vertically or horizontally on the basis of a statistics called the critical height premium. The vertical mixed-use project pricing model can be further verified by containing a height premium if market price information is derived from non-vertical mixed-use properties. This study suggests a more comprehensive real option approach to quantify the advantages and disadvantages of operating vertical mixed-use developments.

Net benefits of urban slums redevelopment policies on the value of adjacent residential property

Abstract: Over time, the government of Pakistan introduced several strategies to deal with the issue of slums in its capital city, Islamabad. Contrary to the traditional strategies that primarily focus on the tenure security of occupants, the strategy of slum redevelopment is more composite. It involves the up-gradation of slums in their existing sites as well as the demolition of slums from the posh areas. The present study is first to empirically investigates the outcomes of the slums redevelopment policies on the value of adjacent residential properties. Using a rental valuation based hedonic price model, the study examined the spillover effects of an urban slum up-gradation and eviction projects on the nearby housing values. The results show that the redevelopment of slums reduces the adverse effects on residential value. It is essential for the urban planners to cautiously include the slum redevelopment projects spillover effects on the adjacent property value in different geographical locations, to maximize the net positive effects of improvements on the neighborhood.

Consumption and investment values in housing price: a real options approach

Abstract: Homeowners can be viewed as the put option holders who can sell housing to lenders when the housing price is lower than its mortgage value and sell houses when the housing price rises above a certain threshold. On the basis of the theory of investment under uncertainty, we model the housing value from the perspective of houseowners who can choose to either live in their houses or switch houses for comfort improvement and price appreciation. We can decompose the housing value into consumption and investment values by exploring parameters affecting housing value and decision making of houseowners. We find that the proportion of investment value to housing value increases with the volatility of the housing market, indicating the possible formation of housing bubbles. In addition, the comfort and utility provided by housing are critical for homeowners to decide whether to sell their houses. The analysis provides policymakers and market participants in the real estate market with insights into the price formation of real estate.

U.S. REIT industry profitability: a Bennet decomposition of industry dynamics

Abstract: This paper considers the aggregate profitability performance of the REIT industry. The aggregate performance depends on the underlying microeconomic dynamics within an industry – the growth of individual REITs (the within effect), the reallocation between existing REITs (the between effect), the entry of new REITs (the entry effect), and the exit of the existing REITs (the exit effect). We apply an extended Bennet (1920) dynamic decomposition on the REIT industry’s return on equity (ROE) and study the annual data on U.S. Equity REITs for the 1989 to 2015 period and various REIT industry specific sub-sample periods. Bailey et al.’s (1992) and Haltiwanger’s (1997) dynamic industry performance decompositions are special cases of the Bennet decomposition. The “within” and “between” effects dominate the annual changes in this industry’s ROE. To the extent that our Equity REIT sample proxies for the FTSE NAREIT All Equity Index, our conclusions also relate to this index’s profitability performance between 1989 and 2015.