Showing papers in "Journal of European Real Estate Research in 2018"

Examining the spatial relationship between environmental health factors and house prices: NO2 problem?

Abstract: Purpose Air quality, noise and proximity to urban infrastructure can arguably have an important impact on the quality of life. Environmental quality (the price of good health) has become a central tenet for consumer choice in urban locales when deciding on a residential neighbourhood. Unlike the market for most tangible goods, the market for environmental quality does not yield an observable per unit price effect. As no explicit price exists for a unit of environmental quality, this paper aims to use the housing market to derive its implicit price and test whether these constituent elements of health and well-being are indeed capitalised into property prices and thus implicitly priced in the market place. Design/methodology/approach A considerable number of studies have used hedonic pricing models by incorporating spatial effects to assess the impact of air quality, noise and proximity to noise pollutants on property market pricing. This study presents a spatial analysis of air quality and noise pollution and their association with house prices, using 2,501 sale transactions for the period 2013. To assess the impact of the pollutants, three different spatial modelling approaches are used, namely, ordinary least squares using spatial dummies, a geographically weighted regression (GWR) and a spatial lag model (SLM). Findings The findings suggest that air quality pollutants have an adverse impact on house prices, which fluctuate across the urban area. The analysis suggests that the noise level does matter, although this varies significantly over the urban setting and varies by source. Originality/value Air quality and environmental noise pollution are important concerns for health and well-being. Noise impact seems to depend not only on the noise intensity to which dwellings are exposed but also on the nature of the noise source. This may suggest the presence of other externalities that arouse social aversion. This research presents an original study utilising advanced spatial modelling approaches. The research has value in further understanding the market impact of environmental factors and in providing findings to support local air zone management strategies, noise abatement and management strategies and is of value to the wider urban planning and public health disciplines.

Impact of volatility and equity market uncertainty on herd behaviour: evidence from UK REITs

Abstract: This paper aims to examine herding behaviour among investors and traders in UK-listed Real Estate Investment Trusts (REITs) within three market regimes (low, high and extreme volatility periods) from the period June 2004 to April 2016.,Observations of investors in 36 REITs that trade on the London Stock Exchange as at April 2016 were used to analyse herding behaviour among investors and traders of shares of UK REITs, using a Markov regime-switching model.,Although a static herding model rejects the existence of herding in REITs markets, estimates from the regime-switching model reveal substantial evidence of herding behaviour within the low volatility regime. Most interestingly, the authors observed a shift from anti-herding behaviour within the high volatility regime to herding behaviour within the low volatility regime, with this having been caused by the FTSE 100 Volatility Index (UK VIX).,The results have various implications for decisions regarding asset allocation, diversification and value management within UK REITs. Market participants and analysts may consider that collective movements and market sentiment/psychology are determinative factors of risk-return in UK REITs. In addition, general uncertainty in the equity market, proxied by the impact of the UK VIX, may also provide a signal for increasing herding-related risks among UK REITs.

An empirical-deductive model for the assessment of the mortgage lending value of properties as securities for credit exposures

Abstract: Purpose This study aims to propose and test an innovative methodology for assessing mortgage lending value. The method tries to improve and rationalize, within the canonical and derivative approach that is generally used by the sector operators, the appraisal of the percentage reduction to be applied to the market value. Design/methodology/approach Considering that the European Mortgage Federation and the Basel Committee highlight the importance of information about the risks of properties to be loaned on, the value at risk approach has been developed so as to assess the mortgage lending value as a technique of risk analysis. With reference to the Italian context, the method elaborates the historical analysis of the property values in 93 major Italian cities for the residential and commercial intended uses in a significant period (1967-2015) and allows to determine the reduction coefficients of the market value as a function of the central, semi-central and peripheral locations of the property. Findings The results include the reduction coefficients of the market value for the derivative appraisal of the mortgage lending value. The coefficients obtained satisfy the need for a rational assessment of the property risk and the appropriate spatial contextualization of the risk components related to the local demand and supply, thus eliminating any inconsistency and danger of determining the mortgage lending value using a simple and lump-sum percentage deduction of the market value. Originality/value The global economic crisis in the past decade, triggered by the 2007 US Subprime mortgage crisis and consequent collapse of property values, has highlighted the need for high level professional skills in the appraisal of properties as securities for credit exposures. The method proposed for the assessment of the mortgage lending value allows to overcome the uncertainties underlying the determination of an independent value through indirect methods (income approach, cost approach) and rationalize the appraisal of the risk in the traditional derivative approach through a flexible procedure, with it being possible to adapt it to any territorial context, as well as any intended use.

Peer-to-peer lending and real estate mortgages: evidence from United Kingdom

Abstract: Purpose This paper aims to collect data from a unique database provided by LendInvest and to study the key differences in the lending features for the two types of lending solutions. Findings Peer-to-peer (P2P) loans are prevalently short-term financing solutions (bridge financing), and the size of the loan is above average of the market. The loan portfolio is normally more geographically concentrated with respect to the average for the overall market and the main geographical areas for P2P lending are not just the main markets served by traditional lenders. Areas served by P2P lending have a lower population income than the national average and are characterized by below-average real estate price performance. Research/limitations/implications The results support the hypothesis of a complementary relation between conventional and P2P lending, showing that the latter represents a solution that is servicing areas that, because of the lower value of the collateral and lower average income, do not have easy access to the traditional mortgage market. Originality/value The paper is a first empirical contribution on the analysis of the market served by P2P real estate lending financing solution.

Is there room for another hedonic model?: The advantages of the GAMLSS approach in real estate research

Abstract: Purpose This paper aims to explore the in-sample explanatory and out-of-sample forecasting accuracy of the generalized additive model for location, scale and shape (GAMLSS) model in contrast to the GAM method in Munich’s residential market Design/methodology/approach The paper explores the in-sample explanatory results via comparison of coefficients and a graphical analysis of non-linear effects The out-of-sample forecasting accuracy focusses on 50 loops of three models excluding 10 per cent of the observations randomly Afterwards, it obtains the predicted functional forms and predicts the remaining 10 per cent The forecasting performance is measured via error variance, root mean squared error, mean absolute error and the mean percentage error Findings The results show that the complexity of asking rents in Munich is more accurately captured by the GAMLSS approach than the GAM as shown by an outperformance in the in-sample explanatory accuracy The results further show that the theoretical and empirical complexities do pay off in view of the increased out-of-sample forecasting power of the GAMLSS approach Research limitations/implications The computational requirements necessary to estimate GAMLSS models in terms of number of cores and RAM are high and might constitute one of the limiting factors for (institutional) researchers Moreover, large and detailed knowledge on statistical inference and programming is necessary Practical implications The usage of the GAMLSS approach would lead policymakers to better understand the local factors affecting rents Institutional researchers, instead, would clearly aim at calibrating the forecasting accuracy of the model to better forecast rents in investment strategies Finally, future researchers are encouraged to exploit the large potential of the GAMLSS framework and its modelling flexibility Originality/value The GAMLSS approach is widely recognised and used by international institutions such as the World Health Organisation, the International Monetary Fund and the European Commission This is the first study to the best of the author’s knowledge to assess the properties of the GAMLSS approach in applied real estate research from a statistical asymptotic perspective by using a unique data basis with more than 38,000 observations

Evaluating the cost and benefits of earthquake protection of buildings

Abstract: Purpose The purpose of this study is the evaluation of the cost and benefits of earthquake protection of buildings to verify whether the legislative push, through tax incentives, will produce results and lead to a redevelopment of private real estate assets. Design/methodology/approach Through contingent valuation, this research aims to measure the propensity of homeowners to invest in the seismic security of their properties. The sample of homeowners was selected in a southern Italy city, which was characterized by a medium-high seismic hazard. The willingness to pay, once made independent from the family income, was compared with the actual cost of a seismic retrofitting technique to assess its cost-effectiveness. Findings The analysis developed on an example case shows that the economic sustainability of the intervention is only verified when considering the current tax incentives for this type of intervention. Practical implications Choosing to introduce a system to compulsory insurance against seismic risk could certainly be a strong incentive for the implementation of retrofitting interventions on private real estate assets. In this direction, investigations like this can be fundamental to establish the fair risk premium. Originality/value The need for effective seismic risk mitigation policies is also based on the growing awareness of the, often fatal, effects of seismic events, emphasized by the recent medium and high intensity events that hit Italy. The issue of the security of residential buildings is therefore a very topical issue in view of their high seismic vulnerability and the vast number of buildings requiring major seismic retrofitting. Therefore, the propensity of owners to intervene in improving the seismic performance of their properties can be crucial in seismic risk mitigation.

REITs and REOCs and their initial stock market performance: a European perspective

Abstract: The purpose of this study is to examine the differences between initial public offering (IPO) pricing in the real estate sector and to provide insight into how real estate investment trust (REIT) and real estate operating company (REOC) IPOs perform in a comparative framework.,The sample consists of 107 European REIT and REOC IPOs from nine European countries over the period 2000-2015. The initial returns are examined by creating subsamples based on the two business forms, countries and specific timeframes (before, during and after the global financial crisis). A multiple regression analysis is applied to identify the ex-ante uncertainty factors, IPO and firm characteristics, which may impact on the different underpricing levels of REITs and REOCs.,European property companies are on average significantly underpriced by 4.63 per cent. The results also reveal that REITs provide a significantly lower underpricing of 2.02 per cent than REOCs, with a positive initial return of 5.69 per cent. The causal treatment effect of the legal form of the company and the underpricing is confirmed by propensity score matching. Among the most influential factors for a lower REIT underpricing, besides the REIT-status itself, are the volatility, offer size and market phase of the IPO. During the global financial crisis (GFC) (2008-2010), underpricing exceeds the initial return for the total sample by approximately 70 per cent.,This is the first study investigating differences in the underpricing level of REITs and REOCs in a European setting, including the GFC as an extraordinary market phase. The authors provide evidence that REIT IPOs compared to REOC IPOs “leave less money on the table”.

Developers’ price setting behaviour in urban residential redevelopment projects

Abstract: The authors would like to acknowledge funding from Norwegian Research Council, RCN, the research project “220561 Urban Plan”. Norges forskningsrad Prosjektnummer 220561

Homebuyers’ preferences concerning installed photovoltaic systems : a discrete choice experiment

Abstract: This paper aims to report on homebuyers’ preferences and willingness to pay for installed home photovoltaic systems. Their influence on the market position of a dwelling is relatively unknown. Considering that expected lifespan of photovoltaic systems is at least 25 years, it is likely that many dwellings with a photovoltaic system will enter the housing market.,Few houses with installed photovoltaic systems have been sold in the market to date. Lack of real market data imposes a method based on the stated preference data. Therefore, the general preferences toward photovoltaic systems are determined by a discrete choice model based on responses of 227 homebuyers in the Eindhoven region, The Netherlands. Further, the model estimates were used to assess the indirect willingness to pay for home photovoltaic systems. This initial willingness to pay is further reassessed with the direct willingness to pay collected in an open-ended questionnaire format.,Results of the model show that the homebuyers’ preferences for home photovoltaic systems are large and significant. In addition to general preferences, this article reports on the taste heterogeneity carried out by separating observations based on the respondents’ characteristics. For example, photovoltaic systems are more appealing to homebuyers in more urban or central neighbourhoods. Further, the results of the direct survey lead to the conclusion that people are probably willing to pay close to the replacement value of the system and only 22 per cent of all respondents did not want to pay anything for the installed photovoltaic system.,These findings are exploratory and they raise a number of questions for further investigations, such as those regarding the real estate value of the installed photovoltaic systems. The reported findings must be regarded as local, thus further research is necessary to understand the impact on European housing markets.,Preferences and willingness to pay for home photovoltaic systems can provide a variety of economic, social and political recommendations to different interested parties such as homeowners, buyers, realtors, retailers, energy companies and governments. For instance, a homeowner would like to know what would be the effect of a photovoltaic system on the housing market.,As per the knowledge of authors, this is the first paper to estimate the impact of an installed photovoltaic system on housing choice, measured by stated choice data in the local housing market. It expands the existing body of knowledge for increasingly important issues of valuing and measuring preferences for photovoltaic systems installed on dwellings.

An analysis of auction strategies in apartment sales

Abstract: Purpose This paper aims to empirically test the effect of list price and bidding strategies in ascending auctions of residential real estate. Design/methodology/approach Three regression models are estimated, using a unique data set from 629 condominium apartments in the inner-city of Stockholm, Sweden, sold between January 2010 and December 2011. Findings The results show that jump bidding has the predicted effect of reducing competition by scaring off bidders. However, a higher average bid increment leads to a higher selling price. Furthermore, results show that a fast auction in terms of average time between bids acts to increase the probability of so-called auction fever as both the number of bidders and the selling price are positively correlated with the speed of the auction. While the average behavior of all auction participants, in terms of jump bidding and time between bids, significantly affects auction outcomes, differences in strategies applied by winners and losers show mixed results. The results of this study with respect to sellers’ list price strategy show that underpricing is an ineffective strategy in terms of enticing more bidders to participate in the auction. Furthermore, underpricing is not sufficient to have a positive effect on the selling price. Originality/value This paper is one of the first papers to empirically analyze how different bidding strategies affect the outcome of residential real estate auctions in terms of competition and the final selling price.

The effect of leverage on the performance of real estate companies: A pan-European post-crisis perspective of EPRA/NAREIT index

Abstract: This paper aims to investigate the impact of leverage on the total shareholder return of European publicly traded real estate vehicles in three periods: Crisis Period (2007-2009), Rebound Period (2009-2014) and the Whole Period.,Cross-sectional analysis is used and the leverage effect on the performance is controlled for seven other independent variables (local market risk premium, size, book-to-market, short-term debt, cash); moreover, regional differences are accounted for.,It is established that during the Crisis Period, leverage levels are negatively associated with performance: this relationship also holds throughout the Whole Period, implying that for real estate securities, the cost of financial distress is larger than the potential gain from taxation, although the economic significance of it is limited. The Fama and French (1992) three factors, including size, book-to-market and local market risk premium, are found to be relevant, which is consistent with the literature. In addition, the UK and Sweden regions are identified as significant.,Even if there is sizeable body of literature on determinants of leverage and determinants of asset returns, little work has been done on how leverage affects the returns of European real estate companies. In addition, this paper takes advantage of observations from a full economic cycle and the possible effects of the crisis period.

The significance and performance of property companies on the AIM stock market

Abstract: The Alternative Investment Market (AIM) is an important UK growth-focused stock market. The purpose of this paper is to assess the significance, risk-adjusted performance and portfolio diversification benefits of property companies on the AIM stock market over 2005-2015. The post-Global Financial Crisis (GFC) recovery of property companies on AIM is highlighted, as well as their performance compared with property companies on the London Stock Exchange (LSE) main board.,Using monthly total returns, the risk-adjusted performance and portfolio diversification benefits of property companies on the AIM stock market over 2005-2015 are assessed and compared with a range of other asset classes. Sub-period analysis is used to assess the post-GFC recovery of the property companies on AIM.,Property companies on AIM delivered poor risk-adjusted returns over 2005-2015, with limited portfolio diversification benefits with the overall AIM stock market. However, since the GFC, property companies on AIM have delivered strong risk-adjusted returns, with improved portfolio diversification benefits with the overall AIM stock market. This post-GFC performance is shown to be more than a small cap effect, reflecting the property portfolios in these AIM property companies. Despite this strong post-GFC performance, the AIM property companies under-performed property companies on the LSE main board on a risk-adjusted basis.,AIM provides an important platform for property companies seeking start-up and growth opportunities in a less-regulated funding environment. This has been reinforced by strong risk-adjusted performance in a post-GFC context. However, the stronger risk-adjusted performance of LSE listed property companies and their superior scale, resources and higher quality property portfolios present challenges for increased investor support for the AIM property companies going forward.,This paper is the first published empirical research analysis of the risk-adjusted performance and diversification benefits of property companies on the AIM stock market. This research enables empirically validated, more informed and practical property investment decision-making regarding the strategic role of property companies on the AIM stock market in a portfolio.

Can land value uplift deliver affordable housing? Experiences from England

Abstract: Purpose The theoretical case for land value capture is well known but the effectiveness of affordable housing delivery as a capture mechanism is not so well documented. Building on the earlier theoretical and empirical work of Whitehead (1991 and 2007) and Crook and Whitehead (2002), this paper considers the provision of affordable housing from a land value capture viewpoint, focusing on the process by which the amount of affordable housing is determined between landowners/developers on the one hand and local planning authorities on the other. Design/Methodology/Approach The paper adopts a mixed mode approach to data collection. Two surveys of local planning authorities were undertaken, together with a series of case study interviews. Findings The paper evaluates whether land value capture has been an effective mechanism for delivering affordable housing by focusing on three principal areas: first, the political agenda in relation to land value capture and the supply of affordable housing; second, the nature and motivation of the stakeholders involved in affordable housing decision-making; and third, the use of economic models as decision tools for determining the amount and type of affordable housing are negotiated. Originality/Value The research provides some insight into the effectiveness of local authority affordable housing targets as a means of capturing the uplift in land value that results from the grant of planning permission.

Supporting property valuation with automatic reconciliation

Abstract: Purpose Valuation is a professional activity based on international and local standards. In the valuation process more than one method can be modified. In this case, a final reconciliation of different opinions of value may be required. It is a matter of fact that the final result of these different valuation methods may vary. Therefore, in the final part of the valuation process, the valuer is required to assign a weight to the different methodologies to reach an appropriate opinion of value. This process is essentially based on valuer’s expertise. This paper aims to propose an automatic procedure of calculating the weights to assist the valuer in the valuation process. Design/methodology/approach The work provides methodologies to assign the weights through simple mathematical procedures that can be used to support subjective judgement in the valuation process. The models proposed can be applied to other phases of reconciliation inside the valuation process and are based on the collection of previous property data in the same market segment. Findings Two different methodologies are proposed to support valuers in the valuation process and in particular in the phase of the choice of the weights for final reconciliation purposes. Research limitations/implications The implication is the development of an information system to support the appraiser in providing these weights. The models proposed are only two but represent a future, much larger field of research. Practical implications The models may help in determining more consistent valuation reports. Social implications Consistent valuation reports for the determination of mortgage lending value may contribute to the stability of the social and economic system, especially after the 2008 non-agency mortgage crisis. Originality/value These are original models proposed in literature for such kind of problems.

Volatility causality and contagion in international securitized real estate markets: Evidence from Markov-switching analysis

Abstract: Purpose This paper aims to investigate volatility causality and return contagion on nine international securitized real estate markets by appealing to Markov-switching (MS) regime approach, from July 1992 to June 2014. Design/methodology/approach An MS causality interaction model (Psaradakis et al., 2005), an MS vector auto-regression mode (Krolzig, 1997) and a multivariate return contagion model (Dungey et al., 2005) were used to implement the empirical investigations. Findings There exist regime shifts in the volatility causality pattern, with the volatility causality effects more pronounced during high volatility periods. During high volatility period, real estate markets’ causality interactions and inter-linkages contribute to strong spillover effect that leads to extreme volatility. However, there is relatively limited return contagion evidence in the securitized real estate markets examined. As such, the US financial crisis might probably be due to cross-market interdependence rather than contagion. Research limitations/implications Because international investors incorporate into their portfolio allocation not only the long-run price relationship but also the short-run market volatility connectedness and return correlation structure, the results of this MS causality and contagion study have provided valuable information on the evaluation of regime-dependent securitized real estate market risk, as well as useful guidance on asset allocation and portfolio management decisions for institutional investors. Practical implications Financial crisis is one of the key determinants of cross-market volatility interactions. Portfolio managers should be alerted of the observation that the US and the other developed securitized real estate markets are increasingly sharing “common market cycles” in recent years, thereby diminishing the diversification benefits. For policymakers, this research indicates that the volatilities of the US securitized real estate market could be helpful to predict those of other developed markets. It is also important for them to pay attention to those potential risk factors behind the amplified causality, contagion and volatility spillover at times of crisis. Finally, a wider implication for policymakers is to manage the transmission channels through which global stock market return and volatility shocks can affect the local economies and domestic financial markets, including securitized real estate markets. Originality/value Real estate investments have emerged to show low correlation with stocks and bonds and contributed to portfolio optimization. With real estate that can serve as a type of consumption commodity and an investment tool, the risk-return profile of real estate is different from that of the underlying stock markets. Therefore, the performance and investment dynamics and real estate-stock link are not theoretically expected to be similar, that requires separate empirical investigations. This paper aims to stand out from the many papers on the same or similar topics in the application of the three MS methodologies to regime-dependent real estate market integration.

Socio-spatial distribution of urban residents in a small-sized city

Abstract: Purpose This study aims to explore the pattern of urban residents’ socio-spatial distribution in a small-sized city where the local housing market capacity and variety is limited. Design/methodology/approach Spatial variation was reflected by two different analysis. First, factor analysis was applied to determine the major dimensions of the social, economic and housing environment in the investigation area. Second, Kriging maps, which depict the socio-spatial distribution pattern of the households according to major dimensions, were produced by interpolating factor scores on a continuous surface. Those were supported by complementary exploratory analysis to deepen the discussion. Findings Homogenous distribution of similar groups to housing areas and low inner differentiation particularly within lower income neighborhoods are the noticeable results of the analysis set. Ethnicity and income differentiation are the principal determinants of socio-spatial distribution pattern in our case. The constraints of the local housing market are seemed to facilitate spatial separation. Disadvantaged population groups are limited to small niches within the urban fabric; they are relegated to poor quality neighborhoods or to unpopular inner-city housing estates. Research limitations/implications This research has been performed for the small size city in Turkey and may not hold for other areas, even though the methodology can be replicated and the mechanisms at play are quite similar elsewhere. Practical implications The internal differentiation of urban residents’ is worth investigation to develop consistent housing and planning policies to overcome prospective social exclusion problems. This study has a potential of remarking the importance of policy-based economic and housing development in smaller cities in Turkey. Social implications Analyses displayed a sectoral structure of the distribution of urban residents but lower inner differentiation within neighborhoods. Limitations of the housing stock facilitate substantial level of isolation to the extent of ethnicity. Two different ethnic groups are confined to small niches, and they are ethnically and economically tied down to their neighborhoods. The physical properties and the quality of both dwellings and the housing environment are the poorest in these areas, and these are unpopular housing areas by the majority of the population. These findings are supposed to give direction of setting consistent housing policies in the case area. Originality/value This research is one of the initial research on socio-spatial distribution of urban residents to housing areas in Turkey. It is also one of the rare examples of socio-spatial differentiation study in small-sized city in the literature. The authors have shown that socio-spatial differentiation would be severe even in small size housing markets as opposed to expectation.

Exploring the valuation of compulsory purchase compensation

Abstract: This paper aims to analyse how Dutch Compulsory Purchase (CP) compensation is decided on and to explore to what extent the valuation of the CP compensation is assessed by professionals within a range of 10 per cent (higher or lower) difference.,The authors study CP compensation using the Dutch Legal Intelligence database, assessing every publicly available court decision and comparing the compensation that is offered in the voluntary negotiations and during the CP procedure in court.,The results show that there are many uncertainties in the valuation process of CP that lead to a broad range of valuation outcomes. In 94 legal CP cases from the Netherlands, the final offer of compensation in court was on average 56.7 per cent higher than the last compensation offer from the expropriator. The differences in valuation were related to several aspects including different systems of valuation and different interpretations of the CP legislation.,A central issue in the CP procedure is the amount of compensation that the landowner receives. There are few researchers who have studied how accurate CP compensation is appraised in practise. This is one of the first attempts internationally to empirically conduct an analysis of CP compensation values.

Pricing lease agreements incorporating tenant’s downscaling option

Abstract: Purpose The purpose of this paper is to analyse the problem that arises when a tenant’s space needs will likely change in the future, but the property owner would prefer to continue renting the initial space to the same tenant The study builds upon ideas on structuring option values into initial rent and proposes a method for evaluating the value of adaptability for both the tenants and the owners Design/methodology/approach The methodology is based on real option pricing, and it includes key variables of building adaptability, lease agreement terms and property market information The methodology explains the importance of understanding the concept of volatility related to space needs and how it affects the tenant’s decision to either remain or vacate the rented premises Real option pricing theory highlights the problem of using linearly growing expectations for physical assets and the obvious problems that arise with that assumption Findings This paper suggests that the principles of option pricing could be used in valuing building adaptability to find the optimal initial rent from both the owner’s and the tenant’s perspective It is pointed that the volatility of the tenant’s future space requirements should drive the effective rent paid by the tenant The paper argues as to why the owner is better off if the tenant can downscale (with building adaptability) their current space rather than vacate the whole space Additionally, this paper presents the reasons for why the tenant should pay more for a space that has such a downscaling option Eventually, both the owner and the tenant are better off because, from the tenant’s perspective, unnecessary relocating costs can be avoided, and from the owner’s perspective, unnecessary re-renting costs can be avoided Practical implications The paper demonstrates how the downscaling option creates value for both the owner and the tenant The owner benefits from higher average occupancy rates, and during lease break points, only part of the premises has to be re-rented rather than the entire premises When these higher occupancy rates are transferred into cash flows with relevant market parameters, it is evident how the rates create extra value for the property owner and for the tenant, subject to lease terms Originality/value The owner benefits from the higher rent, even though there might be more lease break points where parts of the building must be rented out If these kinds of option values can be communicated transparently, it should be possible for the owner and the tenant to agree on such terms

An analysis of regional house prices in Greece

Abstract: Purpose This paper aims to examine the housing market in Greece after the Global Financial Crisis focussing on regional analysis and urban markets in Athens and Thessaloniki. Design/methodology/approach The paper uses a data set of over 70,750 property values from 2007 until 2014 incorporating characteristics variables upon which hedonic models are estimated. These form the bases for calculating value indices for mix adjusted houses/apartments by year and region. The indices are used in a panel model in which regional and economic variables are included as independent variables. Using advances in dynamic panel data modelling, a bias-corrected least squares dummy variable corrected (LSDVC) model is applied. Findings Results indicate the importance of macroeconomic variables in terms of the role of disposable income and significantly different regional effects. Examining the major urban markets, results indicate significant differences in the response of house values to exogenous demand side influences, consistent with the finding of significant regional differences in the LSDVC. Research limitations/implications While data on valuations are used that may contain smoothing, the data set covers a large sample of residential properties. As regional economic differences are significant and persistent, housing markets will also behave differently, and hence national policies, unless targeted, will have regionally differentiated effects. Practical implications Regional heterogeneity needs to be considered in model estimation. Social implications Policymakers should consider regional differences to improve policy effectiveness. Originality/value This is the first paper to use a large sample of residential properties in Greece and apply the LSDVC model to overcome estimation biases.

An actor–network theory model of property development

Abstract: The purpose of this paper is to model the property development process from an actor–network theory perspective. The model aims to address the relationship between structure and agency to combine the social and the economic aspects of the property development process.,An inductive methodology was appropriate for this study. Consequently, 12 semi-structured interviews have been carried out with professionals involved in the property development process in central London.,Analysis of the interview transcripts revealed that throughout the development process a developer creates a core actor–network and enrols those required for production. Economic, cultural, legal and political structures influence actions throughout the development process and therefore have the ability to cause disruption. As a result, sub-networks are created to overcome challenges throughout the development process, such as obtaining planning consent. This allows the interests of actors to be aligned or re-aligned so that solutions can be punctualised into the core actor–network. Additionally, structures are affected by actions throughout the property development process.,It is recommended that developers measure the extent to which the interests of actors are successfully aligned and re-aligned throughout a developments life cycle, in addition to a developments financial success. The findings are paramount for policymakers and regulators, as it allows them to understand the intricate workings of the development process and so when they regulate or develop policy, they will understand how it will reverberate through the process and recalibrate it, thereby limiting unforeseen consequences.,This research has proven valuable given it advances the property development process literature by examining the property development process from an actor–network theory perspective and provides areas for further study.