What influence domestic and overseas developers’ decisions?

2019 ◽  
Vol 37 (2) ◽  
pp. 153-171 ◽  
Author(s):  
Huiying Hou ◽  
Hao Wu
Keyword(s):  
Decision Making ◽  
International Trade ◽  
Project Management ◽  
Real Estate ◽  
Stated Preference ◽  
Foreign Firms ◽  
Trade Theory ◽  
Content Type ◽  
Residential Market ◽  
Regulatory Constraint

PurposeForeign firms entering into the domestic real estate industry and foreign investment control are significant in global hot markets such as Australia. Despite their market impact and policy sensitivity, developer choice is rarely studied. The purpose of this paper is to study domestic and overseas property developers for their motive and preference in response to market growth and market barriers including regulatory constraint.Design/methodology/approachInternational trade theory suggests local and overseas firms can vary significantly for their risk profile when engaging in location-specific development opportunities. Using a comprehensive decision factor system for the residential development process, the authors conducted an experimental survey to collect the prime data to measure stated preference of domestic and overseas developers in the context of the Melbourne residential market.FindingsResults suggest high consistency between the samples of domestic and overseas developers. Possible explanations include vertical integration by innovative contracting, strict regulatory constraint dictates domestic and overseas firms’ preference or sample selection bias. This micro-analysis of developer stated preference highlights their entrepreneurial ability to combine substitution and integration for innovative contractual strategy. This ability to join asset holding and project management enables firm flexibility to mitigate business risk in rapidly globalising capital and factor markets.Practical implicationsThese insights of firm-level decision making contribute to the decision literature of real estate developers and are relevant to the broader literature of industrial economics and international trade. Government may evaluate policy strategies based on the explicit entrepreneur (e.g. developer) preference for their “comparative advantage”.Originality/valueThis paper highlights developer’s ability to jointly consider investment and project management for decision making. It found that other than political cost such as national interest and domestic interest group pressure, domestic and overseas developers in the Melbourne residential market actually think quite alike. It suggests that irrespective of property ownership conditions, market integration occurs in the Melbourne residential sector.

A post-global financial crisis (GFC) framework for strategic planning, assessment and management decision making for US sustainable commercial real estate

2017 ◽  
Vol 35 (6) ◽  
pp. 589-618 ◽  
Author(s):  
Pernille Hoy Christensen
Keyword(s):  
Decision Making ◽  
Financial Crisis ◽  
Real Estate ◽  
Performance Indicators ◽  
Institutional Investors ◽  
Global Financial Crisis ◽  
Real Estate Market ◽  
Commercial Real Estate ◽  
Content Type ◽  
Sustainability Initiatives

Purpose The purpose of this paper is to understand both the facts and the values associated with the breadth of issues, and the principles related to sustainable real estate for institutional investors. Sustainable real estate is a growing sector within the commercial real estate industry, and yet, the decision-making practices of institutional investors related to sustainability are still not well understood. In an effort to fill that gap, this research investigates the post-global financial crisis (GFC) motivations driving the implementation of sustainability initiatives, the implementation strategies used, and the predominant eco-indicators and measures used by institutional investors. Design/methodology/approach This paper presents the results of a three-round modified Delphi study conducted in the USA in 2011-2012 investigating the nature of performance measurements and reporting requirements in sustainable commercial real estate and their impact on the real estate decision-making process used by institutional investors. Two rounds of in-depth interviews were conducted with 14 expert panelists. An e-questionnaire was used in the third round to verify qualitative findings. Findings The key industry drivers and performance indicators influencing institutional investor decision making were associated with risk management of assets and whether initiatives can improve competitive market advantage. Industry leaders advocate for simple key performance indicators, which is in contrast to the literature which argues for the need to adopt common criteria and metrics. Key barriers to the adoption of sustainability initiatives are discussed and a decision framework is presented. Practical implications This research aims to help industry partners understand the drivers motivating institutional investors to uptake sustainability initiatives with the aim of improving decision making, assessment, and management of sustainable commercial office buildings. Originality/value Building on the four generations of the sustainability framework presented by Simons et al. (2001), this research argues that the US real estate market has yet again adjusted its relationship with sustainability and revises their framework to include a new, post-GFC generation for decision making, assessment, and management of sustainable real estate.

scholarly journals The changing real estate market transparency in the European real estate markets

2016 ◽  
Vol 34 (4) ◽  
pp. 407-420 ◽  
Author(s):  
Graeme Newell
Keyword(s):  
Decision Making ◽  
Real Estate ◽  
Real Estate Market ◽  
Real Estate Investment ◽  
Content Type ◽  
Real Estate Markets ◽  
Market Transparency ◽  
Global Context ◽  
Business Competitiveness ◽  
Risk Dimensions

Purpose – Real estate market transparency is an important factor in real estate investment and occupier decision making. The purpose of this paper is to assess real estate transparency over 2004-2014 to determine whether the European real estate markets have become more transparent in a regional and global context. Design/methodology/approach – Using the JLL real estate transparency index over 2004-2014, changes in real estate market transparency are assessed for 102 real estate markets. This JLL real estate market transparency index is also assessed against corruption levels and business competitiveness in these markets. Findings – Improvements in real estate transparency are clearly evident in many European real estate markets, with several of these European real estate markets seen to be the major improvers in transparency from a global real estate markets perspective. Practical implications – Institutional investors and occupiers see real estate market transparency as a key factor in their strategic real estate investment and occupancy decision making. By assessing changes in real estate transparency across 102 real estate markets, investors and occupiers are able to make more informed real estate investment decisions across the global real estate markets. In particular, this relates to both investors and occupiers being able to more fully understand the risk dimensions of their international real estate decisions. Originality/value – This paper is the first paper to assess the dynamics of real estate market transparency over 2004-2014, with a particular focus on the 33 European real estate markets in a global context to facilitate more informed real estate investment and occupancy decision making.

scholarly journals The embeddedness of sustainability in real estate investment decision-making

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Cath Jackson ◽  
Allison Orr
Keyword(s):  
Decision Making ◽  
Real Estate ◽  
Investment Decision ◽  
Qualitative Approach ◽  
Real Estate Investment ◽  
Content Type ◽  
Potential Barriers ◽  
Fund Managers ◽  
Investment Decision Making ◽  
Barriers To Implementation

Purpose The importance of real estate’s sustainability rating has increased significantly. Studies undertaken in 2007 and 2016 show that, at acquisition, the rating rose from 7th to 3rd most important attribute. This shift in priorities parallels the RICS embracing the 10 principles of the UN Global Compact (RICS, 2015). However, while sustainability value premia appear common in some international markets, the picture is mixed and drivers and mechanisms lack empirical investigation. The literature reveals potential barriers to investors fulfilling both sustainability and financial objectives. The purpose of this study is explore these potential barriers. Design/methodology/approach Focus groups with real estate fund managers, sustainability managers and acquisitions surveyors are undertaken to explore the adoption and implementation of environmental sustainability policies. This reveals a series of barriers to implementation and these are then explored in greater depth through a series of interviews with fund managers. This layered, qualitative approach is designed to provide detailed knowledge of practical and conceptual sustainability issues within the UK real estate market. Findings Key drivers underpinning the adoption of sustainability policies are revealed and barriers to implementation are found to relate to data on investment performance, valuation methodologies and prohibitive capex. Further, the heterogeneous, opaque and slow-moving nature of the market is prohibitive and intervention is encouraged to overcome the lack of financial viability that hinders improvements. Originality/value Research is dominated by highly aggregated quantitative data on sustainability within commercial real estate markets. The qualitative approach used here adds new insights and value to the understanding of the embeddedness of sustainability in real estate investment decision-making.

The short-run dynamics of Australian real estate investment trusts and direct real estate at the subsector level

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
James Giannarelli ◽  
Piyush Tiwari
Keyword(s):  
Decision Making ◽  
Real Estate ◽  
Practical Significance ◽  
Market Forces ◽  
Real Estate Investment ◽  
Content Type ◽  
Commercial Property ◽  
Fund Managers ◽  
Short Run ◽  
Market Factors

PurposeThis paper examines the extent of the short-run relationship between Australian real estate investment trusts (A-REITs) and direct real estate returns on both a commercial property sector and a prime and secondary grade basis, i.e. a subsector basis.Design/methodology/approachTwo-step methodology is used. First, we identify the dynamic interdependencies between A-REITs and each commercial property subsector to determine whether the returns of A-REITs lead each subsector or vice versa. Second, short-run deviations between these asset returns are estimated by measuring their individual response behaviours to changes in key economic and financial market factors that are expected to influence these returns.FindingsResults suggest that each subsector shares a unique relationship to A-REITs, given each prime and secondary grade commercial property return series varies in behaviour. Some property subsector returns can be predicted by movements in A-REIT returns, whereas returns for others move independent to changes in A-REITs. Similarly, some subsectors commove with A-REITs in response to changes in certain market factors, whereas others diverge. As such, these findings have practical significance to fund managers and portfolio selection, as each commercial subsector embodies its own exposure to A-REITs and vulnerabilities to market forces. Subsectors that commove with A-REITs in response to certain market forces may be used as substitutes in a portfolio. Alternatively, subsectors that diverge from A-REITs in response to market forces may offer diversification benefits when combined.Practical implicationsThese findings extend beyond existing research to offer critical decision-making guidance at the acquisition level, as fund managers may more closely consider the impact that prime or secondary grade properties within a given commercial sector may have on a portfolio that consists of public and private Australian real estate. Ultimately, a more informed acquisition may be carried out as consideration of a property's asset grade allows for a deeper insight into the property's risk profile and its anticipated short-run impact on a portfolio.Originality/valueThis paper extends previous studies that focus mostly on aggregate or sector-level returns by measuring REIT and real estate dynamics at the subsector level, allowing for practical significance at not only the portfolio level but crucially at the acquisition level, a pivotal decision-making stage for fund managers. This is also the first paper to study REIT and real estate causality and response patterns to changes in market factors at the Australian sector level.

scholarly journals Big data and risk management in business processes: implications for corporate real estate

2019 ◽  
Vol 26 (5) ◽  
pp. 1141-1155 ◽  
Author(s):  
Enrico Battisti ◽  
S.M. Riad Shams ◽  
Georgia Sakka ◽  
Nicola Miglietta
Keyword(s):  
Decision Making ◽  
Risk Management ◽  
Big Data ◽  
Real Estate ◽  
Business Strategy ◽  
Process Management ◽  
Business Processes ◽  
Content Type ◽  
Data Intensive ◽  
Corporate Real Estate

Purpose The purpose of this paper is to improve understanding of the integration between big data (BD) and risk management (RM) in business processes (BPs), with special reference to corporate real estate (CRE). Design/methodology/approach This conceptual study follows, methodologically, the structuring inter-textual coherence process – specifically, the synthesised coherence tactical approach. It draws heavily on theoretical evidence published, mainly, in the corporate finance and the business management literature. Findings A new conceptual framework is presented for CRE to proactively develop insights into the potential benefits of using BD as a business strategy/instrument. The approach was found to strengthen decision-making processes and encourage better RM – with significant consequences, in particular, for business process management (BPM). Specifically, by recognising the potential uses of BD, it is also possible to redefine the processes with advantages in terms of RM. Originality/value This study contributes to the literature in the fields of real estate, RM, BPM and digital transformation. To the best knowledge of authors, although the literature has examined the concepts of BD, RM and BP, no prior studies have comprehensively examined these three elements and their conjoint contribution to CRE. In particular, the study highlights how the automation of data-intensive activities and the analysis of such data (in both structured and unstructured forms), as a means of supporting decision making, can lead to better efficiency in RM and optimisation of processes.

The big data regime shift in real estate

2020 ◽  
Vol 38 (4) ◽  
pp. 363-395 ◽  
Author(s):  
James R. DeLisle ◽  
Brent Never ◽  
Terry V. Grissom
Keyword(s):  
Decision Making ◽  
Big Data ◽  
Real Estate ◽  
Urban Areas ◽  
Regime Shift ◽  
Design Thinking ◽  
Future Research ◽  
Content Type ◽  
Data Movement ◽  
Support Decision Making

PurposeThe paper explores the emergence of the “big data regime” and the disruption that it is causing for the real estate industry. The paper defines big data and illustrates how an inductive, big data approach can help improve decision-making.Design/methodology/approachThe paper demonstrates how big data can support inductive reasoning that can lead to enhanced real estate decisions. To help readers understand the dynamics and drivers of the big data regime shift, an extensive list of hyperlinks is included.FindingsThe paper concludes that it is possible to blend traditional and non-traditional data into a unified data environment to support enhanced decision-making. Through the application of design thinking, the paper illustrates how socially responsible development can be targeted to under-served urban areas and helps serve residents and the communities in which they live.Research limitations/implicationsThe paper demonstrates how big data can be harnessed to support decision-making using a hypothetical project. The paper does not present advanced analytics but focuses aggregating disparate longitudinal data that could support such analysis in future research.Practical implicationsThe paper focuses on the US market, but the methodology can be extended to other markets where big data is increasingly available.Social implicationsThe paper illustrates how big data analytics can be used to help serve the needs of marginalized residents and tenants, as well as blighted areas.Originality/valueThis paper documents the big data movement and demonstrates how non-traditional data can support decision-making.

Integrating stated preference methods for property valuations in housing markets

2019 ◽  
Vol 12 (3) ◽  
pp. 474-486
Author(s):  
Saverio Miccoli ◽  
Fabrizio Finucci ◽  
Rocco Murro
Keyword(s):  
Real Estate ◽  
Stated Preference ◽  
Demand Curve ◽  
Market Price ◽  
Housing Markets ◽  
Demand And Supply ◽  
Content Type ◽  
Potential Demand ◽  
Real Market ◽  
Contingent Valuation Methods

Purpose The study aims to propose an appraisal procedure based on the preferences stated by a sample of potential consumers and producers which makes it possible to obtain the hypothetical demand and supply curves and to estimate the most likely market value and transaction quantities for housing markets with unrevealed prices. Design/methodology/approach The procedure is divided into two steps: the first is aimed at selecting the alternatives that are most likely to meet the market’s preference by applying discrete choice (DC) analysis; the second makes it possible to estimate the potential demand and supply curves for the preferable alternatives singled out through DC analysis by using contingent valuation methods. Findings The results obtained considering only the hypothetical demand or the hypothetical supply differ by an average of 10 per cent from the actual sale price. Conversely, the values detected as the intersection of the hypothetical demand curve and the hypothetical supply curve, fall into variation margins that can be considered fully acceptable in real estate appraisal Originality/value As opposed to the applications performed in international real estate operations where reference is made solely to the potential demand estimate, the described procedure estimates the transaction value as the intersection between the hypothetical demand and supply curves, for the purposes of keeping account of the conditions that generally occur in the real market. Furthermore, it is possible to detect the incidence of the characteristics in market price formation, and to identify the market share of possible alternative assets and estimate the optimal quantity to be produced.

scholarly journals The securitization of residential rental revenue streams in Europe

2017 ◽  
Vol 10 (4) ◽  
pp. 503-518 ◽  
Author(s):  
Jaume Roig Hernando
Keyword(s):  
Real Estate ◽  
Housing Market ◽  
Risk Sharing ◽  
Rental Housing ◽  
Cash Flows ◽  
Property Market ◽  
Investment Funds ◽  
Content Type ◽  
The Usa ◽  
Residential Market

Purpose The purpose of this paper is to analyze the securitization of rental streams, a new investment and finance product introduced in the USA in 2013 that enables fundraising from large residential portfolios owned by major investment funds and investment banking. The securities are made up of non-performance loans as well as real estate portfolios of financial entities. Design/methodology/approach An academic analysis of the European securitization market is performed, as well as a broad overview of the state of the art of the rental housing market and investment property market. Moreover, a market study of Real Estate Owned (hereinafter, REOs) and Real Estate Debts is carried out to determine both the present framework and future trends. Various financial entities and real estate management companies are examined through interviews and data collection to assess the reality of distressed assets and residential portfolios owned by major investors. It introduced the Broker’s Price Opinion concept, de loan-to-value concept and the London Interbank Offered Rate. Findings REO-to-rental securitization is a step forward toward the democratization of finance through the globalization of the residential market, improving risk sharing for major and retail investors. The securitization of rental streams in Europe has not taken off, despite several issuances in the USA since 2013 with significant success where first tranches obtained a credit qualification of triple-A from the majority of the main rating agencies. Originality/value At the end of 2013, a global investment firm launched an innovative finance and investment vehicle that securitized the cash flows originating from leased residential properties. That issue resulted in considerable success and in the development of a new alternative and innovative financing source for real estate activity. Taking into account that housing is a primary need of our society, there is a strong motivation for improving the residential market, and thus, REO-to-rental securitization could help take a step forward in making the housing market more efficient.

scholarly journals Superstitions and Residential Property Buyer Decision Making in Sri Lanka

2021 ◽  
Vol 15 (1) ◽  
pp. 86-96
Author(s):  
Caleb Poologasingam ◽  
Upuli Perera
Keyword(s):  
Decision Making ◽  
Sri Lanka ◽  
Real Estate ◽  
Information Search ◽  
Purchase Intention ◽  
Critical Factor ◽  
Residential Property ◽  
Decision Making Process ◽  
Residential Market ◽  
Superstitious Beliefs

The purpose of this study is to identify the influence of superstitious beliefs on the residential property buyer’s decision-making in Sri Lanka. Despite plethora of research devoted to study superstitious beliefs affecting residential property prices, limited studies are available discussing the effects of superstitious beliefs on the entire buyer decision-making process. Besides, no studies are dedicated to discuss the issue pertaining to the Sri Lankan residential market. Rooted to Vastu, Almanac, and Islamic discipline, superstitious beliefs on the residential property exist in Sri Lanka. These superstitious beliefs, on the whole, concentrate on the design, shape, alignment, size, location, and structure of residential properties. Superstitious beliefs of buyers become a factor affecting their problem recognition, an insight for the information search, a criterion for evaluation of alternatives, a critical factor to make a purchase or purchase intention decision, and measurement of satisfaction of the residential property purchased. These findings are based on in-depth interviews with twenty (20) residential and community experts and thirty (30) residential buyers. John Dewey's five-stage buyer decision-making process is employed as a theoretical framework for data analysis. This examination provides useful insights on the behavioural aspect of the residential market in Sri Lanka for its market actors including real estate developers, agents, businesses, and real estate planners.

Commercial property whole-life costing and the taxation environment

2014 ◽  
Vol 32 (1) ◽  
pp. 56-77 ◽  
Author(s):  
Konstantinos J. Liapis ◽  
Dimitrios D. Kantianis ◽  
Christos L. Galanos
Keyword(s):  
Decision Making ◽  
Life Cycle ◽  
Real Estate ◽  
Net Present Value ◽  
Commercial Real Estate ◽  
Real Property ◽  
Content Type ◽  
Commercial Property ◽  
Investment Appraisal ◽  
Whole Life Costing

Purpose – The main purpose of this paper is the incorporation of life-cycle costs (LCC) and whole-life costing (WLC) method and the taxation environment into the investment appraisal procedure for commercial real property projects. Design/methodology/approach – The paper initially presents the methodologies of LCC and WLC together with the NPV measure for the evaluation of real estate investments. These methods are incorporated into a decision-making model using mathematical approaches. The model is applied to a typical commercial property project (office building) in order to explore the significance of impacts from changes in structured variables and the taxation environment by introducing direct, indirect and property taxes in the evaluation of commercial real estate projects. Findings – Testing of the methodology on the Greek economic environment revealed that time, cost, the tax regime, the financial variables of funding and the monetary and fiscal environment in a commercial real property project are the main variables of net present value (NPV) of the investment. Practical implications – From the calibration of any impact from affected variables, decision-making aiding tools can be extracted for controlling the project throughout its entire life-cycle. Originality/value – An integrated WLC mathematical model for the investment appraisal of commercial property projects is introduced. The herein proposed methodology contributes to taxation policy and real estate theory in general and assists industry professionals in effective commercial property management and decision-making.

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