Cognitive bias, intuitive attributes and investment decision quality in commercial real estate in Uganda

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Moses Munyami Kinatta ◽  
Twaha Kigongo Kaawaase ◽  
John C. Munene ◽  
Isaac Nkote ◽  
Stephen Korutaro Nkundabanyanga
Keyword(s):  
Real Estate ◽  
Loss Aversion ◽  
Cognitive Bias ◽  
Investment Decision ◽  
Commercial Real Estate ◽  
Decision Quality ◽  
Content Type ◽  
Real Estate Sector ◽  
Confidence Degree ◽  
The Relationship

PurposeThis study examines the relationship between investor cognitive bias, investor intuitive attributes and investment decision quality in commercial real estate in Uganda.Design/methodology/approachA cross-sectional research survey was used in this study, and data were collected from 200 investors of commercial real estate in Uganda using a structured questionnaire. Hierarchical regression analysis was used to test the hypotheses derived under this study.FindingsThe results indicate that investor cognitive bias and investor intuitive attributes are positive and significant determinants of investment decision quality in commercial real estate. In addition, the two components of Investor cognitive bias (framing variation and cognitive heuristics) are positive and significant determinants of investment decision quality, whereas mental accounting is a negative and significant determinant of investment decision quality. For investor intuitive attributes, confidence degree and loss aversion are positive and significant determinants of investment decision quality, whereas herding behavior is a negative and significant determinant of investment decision quality in commercial real estate in Uganda.Practical implicationsFor practitioners in commercial real estate sector should emphasize independent evaluation of investment opportunities (framing variation), simplify information regarding investments (Cognitive heuristics), believe in own abilities (Confidence degree), be risk averse (loss aversion) and avoid making decisions based on subjective visual mind (mental accounting) and group think/herding in order to make quality investment decisions. For policymakers, the study has illuminated factors such as provision of reliable information that ought to be taken into account when promulgating policies for regulation of the commercial real estate sector. This will help investors to come up with investment decisions which are plausible.Originality/valueFew studies have focused on investor cognitive bias and investor intuitive attributes on investment decision quality in commercial real estate. This study is the first to examine the relationship, especially in the commercial real estate sector in a developing country like Uganda.

Greenness and financial performance of European REITs

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Giacomo Morri ◽  
Rachele Anconetani ◽  
Luca Benfari
Keyword(s):  
Real Estate ◽  
Positive Relationship ◽  
Operating Performance ◽  
Ordinary Least Squares ◽  
Commercial Real Estate ◽  
Content Type ◽  
Return On Equity ◽  
Real Estate Sector ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to investigate the link between greenness and the operating performance in 50 listed European real estate investment trusts (REITs). Design/methodology/approach Using a sample of 50 listed European REITs, the analysis leverages on Ordinary least squares models to investigate the relationship between greenness and operating performance indicators. In particular, it examines three types of greenness indicators: the overall Green Real Estate Sustainability Benchmark (GRESB) rating, its two components (management and policy [MP] and implementation and measurement) and the seven aspect scores; return on equity (ROE) and return on assets (ROA) are the fundamental measures of REITs operating performance. Findings The results demonstrate a positive relationship between greenness indicators and operating performance in European REITs, but the impact on ROE and ROA differs depending on the GRESB variable analyzed. If the GRESB rating proved to be significant on ROE and ROA, none of its two components has an impact on ROA, and only the MP score has a positive relationship with ROE. Finally, of the seven aspect scores, only the stakeholder engagement is significant on the two dependent variables. Originality/value The commercial real estate sector has a significant role in tackling climate change issues. To incentivize the market to increase the investments in green buildings, it is essential to find a link between their sustainability characteristics and the improvements they deliver in terms of operating performance. Despite there being a substantial body of literature investigating this connection in the US REITs market, there is still limited knowledge on the relationship between green and operating indicators in the European REITs market.

scholarly journals Information for decision-making in in-house and outsourced real estate management organisations

Facilities ◽  
2016 ◽  
Vol 34 (13/14) ◽  
pp. 891-905 ◽  
Author(s):  
Peter Palm
Keyword(s):  
Real Estate ◽  
Decision Maker ◽  
Commercial Real Estate ◽  
Decision Makers ◽  
Content Type ◽  
The Real ◽  
The Real Estate ◽  
Real Estate Sector ◽  
Estate Management ◽  
Real Estate Management

Purpose The purpose of this paper is to examine how the real estate owner (decision maker) insures being able to make informed decisions and how they differ according to organisational form. Design/methodology/approach This research is based on an interview study of nineteen firm representatives, six decision makers and thirteen management representatives, all from Swedish commercial real estate sector. Findings The study concludes that, regardless of organisational setting, the industry has a plan regarding handling information. The decision makers have all secured themselves access to the required/desired information. How this is done and what kind of information it is however differ, if the real estate management is in-house or outsourced. Furthermore, a clear focus on financial and contractual information is evident in both organisational settings. Research limitations/implications The research in this paper is limited to Swedish commercial real estate sector. Practical implications The insight the paper provides regarding required information can shed light on how information systems are built and how to improve your information sharing. Originality/value It provides an insight regarding how the industry, depending on organisation setting, prioritises different information and how the decision maker secures access to it.

scholarly journals Measuring customer satisfaction: a study of the Swedish real estate industry

2016 ◽  
Vol 34 (4) ◽  
pp. 316-331 ◽  
Author(s):  
Peter Palm
Keyword(s):  
Real Estate ◽  
Design Methodology ◽  
Commercial Real Estate ◽  
Signal Quality ◽  
Organisational Development ◽  
Real Estate Industry ◽  
Content Type ◽  
Real Estate Sector ◽  
Customer Evaluations ◽  
Practical Implications

Purpose – The purpose of this paper is to identify the strategies of formal customer evaluations and the use of satisfied customer index in the Swedish commercial real estate industry. Design/methodology/approach – This research is based on an inventory of 24 commercial real estate companies use of formal customer evaluations and an analysis of 15 interviews with top-level managers in the Swedish commercial real estate sector. Findings – Only half of the companies included in the study conduct formal evaluations, although they are considered to work customer oriented. Two different strategies for using formal evaluations is, for improvement work and for signalling quality. One proposed explanation to why only half of the companies conduct formal evaluations is the possibility that the official Swedish Real Estate Barometer is not sufficient if the company would like to use the result for organisational development. There are instead indications that this barometer mainly is used in publicity and marketing purpose, to signal quality. Research limitations/implications – The research in this paper is limited to Swedish commercial real estate sector. But, the overall strategies for conducting formal evaluations should be applicable in general. Practical implications – The insight the paper provides regarding how the industry perceive the Swedish Real Estate Barometer gives direct implications of improvements of the barometer. Originality/value – It provides an insight regarding the use of formal customer evaluations and a proposition of how the Swedish Real Estate Barometer could be changed to better support and fulfil the aim of being a barometer for benchmarking.

scholarly journals Occupier satisfaction and its impact on investment returns from UK commercial real estate

2017 ◽  
Vol 35 (2) ◽  
pp. 135-159 ◽  
Author(s):  
Danielle Claire Sanderson ◽  
Steven Devaney
Keyword(s):  
Real Estate ◽  
Financial Performance ◽  
Customer Service ◽  
Positive Relationship ◽  
Global Financial Crisis ◽  
Commercial Real Estate ◽  
Property Management ◽  
Management Service ◽  
Content Type ◽  
The Relationship

Purpose The purpose of this paper is to investigate the relationship between occupiers’ satisfaction with the property management service they receive and the financial performance of commercial real estate. Design/methodology/approach The study uses occupier satisfaction data for 240 UK commercial properties collected over a 12-year period and the annual total returns achieved by those properties. Various statistical techniques are employed to assess whether increasing occupier satisfaction leads to greater returns for investors. These include comparing excess returns and risk-adjusted returns with occupier satisfaction at each property to assess whether superior property management generates outperformance (“positive alpha”). The study also investigates whether the relationship between occupier satisfaction and returns is the same across all sectors and whether it is affected by market conditions. Findings A positive correspondence is found between benchmark outperformance and occupier satisfaction. The relationship is similar for all sectors of commercial property and is particularly strong during the Global Financial Crisis, indicating that paying attention to satisfying the needs of occupiers has particular benefits during periods when the supply of commercial real estate exceeds demand. Research limitations/implications The sample of properties was restricted to those for which occupier satisfaction data had been collected by RealService Ltd and whose owners permitted access to the financial performance results. This meant that the properties belong to only three landlords, all UK REITs that care sufficiently about occupier satisfaction to commission studies. Thus the findings might not apply to all commercial properties. The mechanism by which the positive relationship between satisfaction and financial performance occurs is not tested, but the conventional mechanisms of reputation and customer loyalty (the “service-profit chain”) are discussed. Practical implications The findings suggest that it is worthwhile for landlords, or property managers acting on their behalf, to understand the needs of their occupiers in order to deliver the level of service that those occupiers desire. Leases in the UK are generally “triple net” and the total returns used for this analysis are net of property management costs, so the positive relationship between satisfaction and performance is not the result of economising on service delivery. A further implication is that valuers should take more account of occupier satisfaction when assessing the capital value of a property, from which total returns are assessed. Originality/value Demonstrating the links between customer service, customer satisfaction and business profitability is rarely attempted because of the many confounding factors that affect profitability. UK listed real estate companies are typically reluctant to reveal the financial performance of individual properties, and information about occupiers’ satisfaction is not generally available. The authors were fortunate to be granted access to a time series of such data, and to be able to demonstrate that attention to delivering a property management service that satisfies occupiers is likely to bring financial rewards to the owners of the property.

scholarly journals Incentives in Swedish commercial real estate companies: the property manager function

2017 ◽  
Vol 35 (2) ◽  
pp. 150-164 ◽  
Author(s):  
Peter Palm
Keyword(s):  
Real Estate ◽  
Effective Property ◽  
Commercial Real Estate ◽  
Property Management ◽  
Real Estate Industry ◽  
Content Type ◽  
Management Level ◽  
Real Estate Sector ◽  
Work Tasks ◽  
Management Organisation

Purpose The purpose of this paper is to identify factors on the property management level for analysing incentives for an effective property management with a focus on organising it in-house. Design/methodology/approach This research is based on an interview study of 11 firm representatives from the Swedish commercial real estate sector with in-house property management. Findings The study concludes that the property management organisation in the in-house setting is governed in an informal way, with a large portion of “freedom with responsibilities” setup instead of regulations. Research limitations/implications The research in this paper is limited to the Swedish commercial real estate sector. Practical implications The insights into the paper regarding how decision makers create incentives for the property management organisation can provide inspiration to design incentives for effort. Originality/value It provides an insight regarding how the commercial real estate industry prioritises different work tasks and how incentives are created to enable effort.

Commercial Real Estate-Specific Approaches and Ethical Dilemmas in the Relationship Between Stakeholders

2020 ◽  
pp. 16-27
Author(s):  
Ionica Oncioiu ◽  
Dan Adrian Popovici ◽  
Hrisanta Cristina Ungureanu ◽  
Florentina Raluca Bîlcan
Keyword(s):  
Real Estate ◽  
Stock Exchange ◽  
Investment Decision ◽  
Moral Dilemmas ◽  
Commercial Real Estate ◽  
Sufficient Information ◽  
Real Estate Industry ◽  
Corporate Social ◽  
High Degree ◽  
The Relationship

The chapter considers a similarity between Maslow's and Corporate Social Responsibilities pyramids. Various groups of stakeholders may have opposite interests in relationship with related companies, generating moral dilemmas. An analysis of organizational and economic accounting patterns in commercial real estate is provided with examples of companies listed to Stock Exchange. These common patterns are in accordance with all professional standards, but still do not offer sufficient information for an informed investment decision of an average investor. The choice of accounting policy is one of the reasons why real estate industry is perceived as a high risk, as a high degree of subjectivity applies through the choices of accounting treatment. Conflicts between stakeholders should be avoided due to the direct impact on a company's development perspectives and value.

scholarly journals Real estate management: incentives for effort

Facilities ◽  
2017 ◽  
Vol 35 (9/10) ◽  
pp. 573-587
Author(s):  
Peter Palm
Keyword(s):  
Real Estate ◽  
Commercial Real Estate ◽  
Decision Makers ◽  
Content Type ◽  
The Real ◽  
The Real Estate ◽  
Real Estate Sector ◽  
Work Tasks ◽  
Estate Management ◽  
Real Estate Management

Purpose The aim of this paper is to examine how the real estate owner (decision maker) can ensure that the preferred tasks are prioritised. In particular, the incentives to ensure motivation to perform to accomplish the strategic goals of the decision maker are investigated. Design/methodology/approach This research is based on an interview study of 19 firm representatives, 6 decision makers and 13 management representatives, all from the Swedish commercial real estate sector. Findings The study concludes that the real estate management organisation in the outsourced management setting is governed by the contract, in detail constituting work tasks, and in the in-house management setting, there is freedom with responsibilities instead of regulations. Research limitations/implications The research in this paper is limited to Swedish commercial real estate sector. Practical implications The insight in the paper regarding how decision makers create incentives for the real estate management organisation in the different organisational settings can provide inspiration to design incentives for effort. Originality/value It provides an insight regarding how the industry, depending on organisation setting, prioritise different work tasks and how incentives are created to enable effort.

scholarly journals How does liquidity in the financial market affect the real estate market yields?

2019 ◽  
Vol 37 (1) ◽  
pp. 2-19 ◽  
Author(s):  
Kyung-Min Kim ◽  
Geon Kim ◽  
Sotiris Tsolacos
Keyword(s):  
Real Estate ◽  
Financial Markets ◽  
Financial Market ◽  
Commercial Real Estate ◽  
Content Type ◽  
Office Markets ◽  
Office Market ◽  
Excess Liquidity ◽  
The Impact ◽  
The Relationship

PurposeAfter the Global Financial Crisis in 2008, the impact of expanded liquidity in the financial market has drawn attention. The purpose of this paper is to examine the relationship between liquidity in financial markets and office markets across Asian countries. In particular, the research not only examines the effect of normal liquidity on real estate markets, but also the effects of excess liquidity are specifically highlighted.Design/methodology/approachThis paper uses panel estimation utilizing quarterly data from the first quarter of 2007 to the fourth quarter of 2015. Taking both time and location dimensions into account allows for a more precise estimate of the relationship between liquidity and office market’s yields.FindingsPer the empirical outcome, an increasing excess liquidity tends to decelerate the value of office yields in six major Asian office market centers due to the positive effect on commercial real estate value. This effect is also identified by comparing the difference between the level of fitted yields and actual yields.Practical implicationsThe results enhance the understanding of commercial real estate yield determinants. Furthermore, the results can be used to assess the impacts of liquidity on major office markets in Asia.Originality/valueThis paper attempts to uncover the impact of liquidity in financial markets on the office market yields. To better understand the relationship, the concept of excess liquidity is adopted and further exploration of each office market is conducted by comparing the fitted yields, which is computed considering the effects of excess liquidity on yield levels and actual yields.

Foreign direct investments in real estate sector and CO2 emission

2013 ◽  
Vol 24 (4) ◽  
pp. 463-476 ◽  
Author(s):  
Hassan Gholipour Fereidouni
Keyword(s):  
Real Estate ◽  
Emerging Economies ◽  
Empirical Studies ◽  
Generalized Method Of Moments ◽  
Foreign Direct Investments ◽  
Content Type ◽  
The Real Estate ◽  
Real Estate Sector ◽  
The Relationship ◽  
Sectoral Fdi

PurposeIn recent years, most emerging economies have experienced large foreign direct investment inflows to the real estate sector (FDIRE) and increases in carbon dioxide (CO2) emissions. The purpose of this study is to empirically investigate the effect of FDIRE on CO2 emissions in a set of emerging economies.Design/methodology/approachApplying fixed‐effect and generalized method of moments (GMM) techniques, this paper uses related observations from 31 emerging economies between 2000 and 2008 to analyze the impacts of FDIRE on CO2 emissions.FindingsThe empirical results show that FDIRE does not contribute to CO2 emissions. It is also found that energy consumption, urbanization and economic development are important determinants of CO2 emissions in emerging economies.Originality/valueWhile there has been a series of papers that investigated the relationship between aggregate FDI and CO2 emissions, very few empirical studies have examined the relation between sectoral FDI and CO2 emissions across a large number of emerging economies.

Determinants of foreign direct real estate investment in selected MENA countries

2016 ◽  
Vol 34 (2) ◽  
pp. 116-142 ◽  
Author(s):  
Mohamed Salem ◽  
Andrew Baum
Keyword(s):  
Real Estate ◽  
Emerging Market ◽  
Empirical Work ◽  
Tobit Model ◽  
Commercial Real Estate ◽  
Econometric Analysis ◽  
Content Type ◽  
Mena Countries ◽  
Real Estate Sector ◽  
Real Estate Investments

Purpose – The purpose of this paper is to identify the main determinants of foreign direct real estate investments (foreign direct investment (FDI)) in selected Middle Eastern and North African (MENA) countries. Design/methodology/approach – The empirical work of this study is an econometric analysis of FDI in the commercial real estate sector for eight MENA markets, namely Algeria, Egypt, Morocco, Qatar, Saudi Arabia, Turkey, Tunisia and the UAE during the period 2003-2009. The econometric analysis is carried out using the pooled Tobit model technique for panel data. Findings – The paper finds that both country-specific factors and real estate sector-specific variables consistently support hypotheses explaining commercial real estate-related FDI, and find evidence that political stability explains why some selected MENA countries attract more real estate investments than other MENA countries. Practical implications – The findings should be seriously considered in any policy making effort on the part of governments in the region. Originality/value – The authors contribute to the existing literature in many ways. First, the study aims to develop econometric models, using both conventional and unique variables, to be generalised and applied to any developed or emerging market. The study applies relevant techniques in estimating the models, including the pooled Tobit model. Second, the research studies eight selected MENA real estate markets from 2003 to 2009, a timeframe and geography not examined in previous published empirical work on commercial real estate investments. Lastly, and for the first time in real estate literature, the study applies the location dimension of Dunning’s OLI paradigm as a theoretical explanation for the behaviour of foreign investors in commercial real estate towards the selected MENA markets.

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