Journal of European Real Estate Research

Andrew Baum; Kieran Farrelly

2009 Journal of European Real Estate Research

doi: 10.1108/17539260910999974

Purpose – Since the mid‐1990s, in a generally strongly performing property market, there has been huge growth in the aggregate size and number of global property funds in both listed and unlisted formats. Managers have been able to raise significant capital, which potentially rewards them with performance fees without necessarily being able to provide clear evidence of out‐performance against defined market benchmarks or performance targets. In a more challenging, mature and increasingly transparent market this is unlikely to continue to be the case as it will be increasingly possible to assemble performance records. The purpose of this paper is to describe the sources of risk and return within property funds and set out a more holistic performance attribution framework encompassing the concepts of alpha (out‐performance) and beta (risk), which traditional attribution frameworks in property fund management do not. Design/methodology/approach – A four component risk and return attribution framework is put forward. The first two components are portfolio structure which measures the impact of allocations to more or less risky markets, and stock selection which considers more or less risky assets. Fund structure, measures the impact of financial leverage and fees and finally the return impact of timing is attributed to the movement of capital into and out of the fund. Findings – A case study of a single unlisted fund has been used to compare traditional attribution results with an examination of alpha and beta return attribution. In this instance fund structure, which is largely the financial leverage impact, is found to be significant. This simply reflects extra risk taking and there is no clear evidence of manager out‐performance, yet significant performance fees are paid to the manager. Originality/value – The paper provides a complete framework for the performance measurement and attribution of property funds, which enables investors to gain a fuller understanding of these increasingly used investment conduits.

Claudio Giannotti; Lucia Gibilaro

2009 Journal of European Real Estate Research

doi: 10.1108/17539260910999983

Purpose – The minimization of financial losses and costs stemming from the credit recovery process is strictly connected with the time necessary to complete the procedure: in real estate credits, it depends on the liquidity and the efficiency of the enforcement procedures. The purpose of this paper is to test the relevance of the economic cycle in Italy on the determinants of the recovery process both at national and regional level. Design/methodology/approach – The first step is to identify the determinants of the real estate loans recovery process duration by the means of the review of the existing literature. The second step develops an empirical analysis to appraise the relevance of the economic cycle on the liquidity of the real estate market and efficiency of real estate enforcement proceedings. The relevance of the economic cycle is verified through, first, a correlation analysis of the selected indexes with the national and regional gross domestic product (GDP) and, second, a regression analysis of the selected indexes on the current and lagged GDP. As it concerns the liquidity of the real estate market, a turnover index is considered stratified both at sectoral and geographical level, while for the real estate enforcement procedures the paper analyzes indexes based on both the turnover of ended and filed proceedings and the pending proceedings outstanding at the year‐end. Findings – The empirical results demonstrated that, in some sectors and geographic areas, the market liquidity is influenced by the national and the regional economic cycles, both expressed at current values and, moreover, the sign of the relationship is frequently negative. As it concerns the enforcement procedures efficiency, empirical evidence does not support the direct influence of the current or past economic cycle on it, leaving room for the relevance of the competent court specific features. Originality/value – The paper considers the Italian market, that is featured by a moderate level of the average loan to value and, above all, by lengthiness administrative procedures. The paper contributes to the existing literature through the integrated examination of the relationship between the recovery process determinants and the national and regional economic cycles over different geographic areas.

Carlos Marmolejo Duarte; Carlos González Tamez

2009 Journal of European Real Estate Research

doi: 10.1108/17539260910999992

Purpose – Environmental noise has become a major issue in densely urbanized areas. The impact of this externality on the quality of life is reflected by a decrease in the residents' well‐being, and subsequently a decrease in property values. A considerable number of studies have used hedonic pricing (HP) to assess the impact of noise on property markets, but few of them have considered the existence of submarkets. Theoretically, it could be expected that the marginal value of 1 dB varies according to the neighbourhood's noise exposure, the property characteristics (e.g. insulation level) and the annoyance experienced by residents. The purpose of this paper is to determine whether noise has a stationary impact on property prices. Design/methodology/approach – Geographically weighted regression is used, which resolves spatial dependencies (i.e. spatial autocorrelation) and considers “soft borders” between submarkets to study the impact of noise on the value of a sample of multifamily dwellings in Barcelona. Findings – The analysis suggests that the noise level does matter, although the noise depreciation sensitivity index (NDSI) found (0.08 per cent) is in the bottom decile of the HP studies reviewed by Navrud. However, the NDSI is not stationary throughout the city, suggesting that 1 dB has a different impact in different areas. Originality/value – 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.

Éamonn D'Arcy

2009 Journal of European Real Estate Research

doi: 10.1108/17539260911000006

Purpose – The purpose of this paper is to provide an analysis of the evolution of institutional arrangements to support the internationalisation of real estate involvements in European markets. Design/methodology/approach – Using a broadly institutional economics approach to markets the paper first outlines a market rational for institutional arrangements to support internationalisation and then examines how such arrangements have evolved in the context of European real estate markets. Findings – Significant new institutional arrangements have evolved to support the internationalisation of real estate involvements in Europe. The need to address the information costs and new information requirements necessitated by internationalisation has been a key driver of institutional formation. Both regulatory and informal barriers to internationalisation have also been important drivers of the evolution of new institutional arrangements to support internationalisation. Taken collectively the new institutional arrangement identified should be viewed as a significant step change in the structure of European real estate markets. Broad market evidence points to the success of these arrangements. Originality/value – The paper provides the first systematic account of the evolution of new institutional arrangements to support the internationalisation of real estate involvements in Europe. It identifies the key drivers of institutional formation and provides a sketch of the key characteristics of the institutions which have evolved.

Joe Doak; Osama S.M. Khan

2009 Journal of European Real Estate Research

doi: 10.1108/17539260911000015

Purpose – The purpose of this paper is to provide two contrasting case studies of the integration and application of e‐learning in real estate education. Design/methodology/approach – The two cases presented in this paper provide good practical illustrations of the integration of e‐learning practice into real estate education. The first examines integration at the programme level through the use of iLearn as a mechanism for personal development planning (PDP). The second examines the use of a technologically enhanced learning and teaching environment at the level of an individual module. Findings – Both case studies report some degree of success in achieving specific learning objectives using e‐learning techniques. With respect to PDP, it is too early to fully evaluate the exact contribution of iLearn. The evidence from the second case study suggests that use of a technologically enhanced class room set‐up to solve simulated cases in the context of a real finance and investment module, facilitates creative learning, promotes team work and increases interaction within and across the participant group. Originality/value – The paper provides insights into current best practice in the use of e‐learning techniques in real estate education as a mechanism for enhancing the teaching and learning experience.