Issues in the development and
application of property
market forecasting: the
Paul M. Mitchell and Paul F. McNamara
Prudential Portfolio Managers Ltd, London, UK
This paper has two main aims. First, it outlines the way in which property
market forecasting is used in a major investment institution. This will show
clearly the importance of such an activity to a modern property investment
operation. It also sets the context for the second aim, namely to review a range
of issues and concerns that we, through our positions in a major investment
organization as receivers and purchasers of such services, have about their
theoretical and technical appropriateness.
Property market forecasting: its use in a major investing
The organizational context
Prudential Portfolio Managers Ltd (PPM) is the investment management
division of the Prudential Corporation of the United Kingdom, managing funds
for the Corporation and offering its services to external clients. It was
established in 1982 and now has investment operations based in seven countries
across five continents. It employs over 200 investment professionals world-wide
and has around £100 billion under management.
In the UK, PPM manages eight property investment funds. These vary
enormously in size from the Prudential’s UK Life Fund property portfolio
which, at approximately £4
billion, is one of the largest property investment
funds in the UK, to some smaller funds of between £20 million and £30 million.
While overseas offices of PPM run investment portfolios for the respective
subsidiaries of Prudential Corporation which sometimes include property, the
vast majority of the UK Life Fund property portfolio is domestically based. The
only exception is a small portfolio of properties in the USA.
Journal of Property Finance
Vol. 8 No. 4, 1997, pp. 363-376.
© MCB University Press, 0958-868X
The views expressed are the authors’ own and are not necessarily those of Prudential Portfolio
Managers Ltd. The authors are grateful to their colleagues for their helpful comments but final
responsibility is the authors’ alone.