Dimensions of surplus value in construction: contributions to labor Economics from the real estate sector

Financial leasing, which is widely used in medium-term financing of investments in many countries, provides great advantages in meeting the increasing demands of the working capital of organizations. Financial leasing, which is a unique transaction that consists of the combination of three different transactions such as medium-term investment loan, lease, instalment sales, and which have a different quality, is a financing method that is very close to medium-term loan adopted in Turkey. Financial leasing, whose legal infrastructure was first established and backed by the Financial Leasing Law No. 3226 of 1985, was put into its application within the scope of the financial leasing, factoring, and financing companies under Law No. 6361 in 2012. To meet the housing demands, within the scope of Law No. 5582 on the Housing Finance System, consumers are provided with the opportunity to provide long-term funds through financial leasing. In addition, apart from being a means of financing in real estate projects by participation banks and financial leasing companies, it is also used as a sales method in housing finance as a real estate acquisition method. The real estate sector in Turkey greatly contributes to the economy as a hub of employment and stimulates the growth of several sectors, so the consideration of financing of real estate is essential. In the period of 2010-2020 in Turkey, the share of financial leasing transactions in total building investments were decreased by 1% at the end of 2020. The share of financial leasing transaction volume in total fixed investments was around 2% at the end of 2020. In the period examined, the share of construction, real estate brokerage, leasing and operating activities and consumer housing finance in the gross transaction volume of financial leasing was around 20-30% in the period before 2018 but fell below 20% in 2019 and 2020. In the field of financial leasing, especially the sell and lease method, it attracts attention as an Islamic financing model in the financing of commercial real estate investments and housing acquisition. In this study, analysis of the applications of the financial leasing in the real estate sector in Turkey was analysed in aspects of legal, economic, and technical, and the identification of problems, the solution was put forward. Through various data published by financial leasing companies and participation banks and application examples, the conditions of success in the real estate sector were examined by taking into account the development process according to the periods, although it provides various advantages, the main reasons for the lack of widespread and weak development of financial leasing transactions in Turkey were determined. Literature review and regulatory analysis were conducted in the study and the current implementation of the financial leasing method in the real estate sector and its impact on the development of the real estate sector were examined. Based upon the results of the interviews and surveys conducted with the managers and experts of financial leasing companies and the beneficiaries of this vehicle, economic analysis of the use of financial leasing in real estate development and real estate investments, basic application problems and opportunities for the development of financing of financial leasing and real estate investments were evaluated. It is noteworthy that financial leasing companies and participation banks have an important role in the current practice and the employment of real estate development and real estate investments and financing experts in both enterprises is mandatory to increase the success of the implementation of the model.

PurposeForeign direct investment in the real estate (FDIRE) sector is required to bridge the gap between investment needed and domestic funds. Further, foreign direct investment is gaining importance because other sources of raising finance such as External Commercial Borrowing and foreign currency convertible bonds have been banned in the Indian real estate sector. Therefore, the objective of the study is to explore the determinants attracting foreign direct investment in real estate and to assess the impact of those variables on foreign direct investments in real estate.Design/methodology/approachJohansen cointegration test, vector error correction model along with variance decomposition and impulse response function are employed to understand the nexus of the relationship between various macroeconomic variables and foreign direct investment in real estate.FindingsThe results indicate that infrastructure, GDP and tourism act as drivers of foreign direct investment in real estate. However, interest rates act as a barrier.Originality/valueThis article aimed at exploring factors attracting FDIRE along with estimating the impact of identified variables on FDI in real estate. Unlike other studies, this study considers FDI in real estate instead of foreign real estate investments.

Growth in the economy of Thailand is highly related to the role of the real estate industry. While the frameworks of Social Accounting Matrix (SAM) and Computable General Equilibrium (CGE) show the interaction between real estate and other sectors in the real economy, the flow of funds accounts and Financial SAM reveals the more realistic picture of the connection between real estate and the financial market. A Financial CGE model is used to investigate the role of real estate investment in the economy of Thailand. This study discusses how the over-invested real estate market can cause the country to be vulnerable to a financial crisis. In addition, the relationship of real estate asset and property markets is incorporated into the model to capture interconnections between production sectors and financial sectors. The macroeconomic and socioeconomic indicators from the model simulation show that moderate investment in real estate sectors can lead to steady economic growth with small impacts on income disparity. In addition, various policy implications can be applied to mitigate the negative effects from real estate investment in Thailand. The analysis suggests that moderate growth in the real estate sector is desirable.

Purpose This paper outlines the significant changes that have occurred in recent years in the non-listed real estate fund management landscape at a global level for institutional investors. Critical drivers of these changes are identified. Design/methodology/approach Using a diverse range of information sources, the changing landscape and drivers for non-listed real estate fund management for institutional investors are examined. The implications for non-listed real estate funds are articulated. Findings The non-listed real estate fund management sector has become increasingly sophisticated and more professional in recent years, offering a range of real estate investment opportunities for institutional investors. An increased range of real estate sectors suitable for institutional investors is identified, including both the traditional real estate sectors and the alternative real estate sectors. Practical implications Insights from understanding the changing landscape of non-listed real estate fund management provides opportunities for more informed, evidence-based real estate investment decision-making by institutional investors. Originality/value This paper provides an up-to-date discussion of the drivers of the changing non-listed real estate funds landscape globally to articulate effective real estate investment strategies for institutional investors.

The research deals with the contemporaneous urbanization process of the city of So Paulo, holding as focus of analysis the production of space through the reproductive strategies of financial capital articulated to the real estate sector. Thus, a reflection upon the economic actions that, connected to the State's political plan, base its reproduction upon the private production of capitalist residential space was pondered, which logic obeys the senses of trade-value and of urban land valorization. The financed economy context marks a series of new relations between the large capital deriving from real estate and the finances, resulting in a growing abstraction of the space as financial value, entailed and at the same time pending toward gaining its autonomy from the productive sphere of the civil construction. Thus, the cutting edge real estate sector is found ever further financed, whether by the widened use of financing instruments to its activities, such as the Real Estate Investment Funds, or by initial public offers and issuance of stock at Stock Exchange venues, which actually impose a new rationality to the real estate sector. In this process, the real estate sector capitalizes and starts to manage the construction and mainly prioritizes the business referent to real estate land incorporation as basis of the space valorization process. The research was centered, at first, on the empiric investigation of the particular case of the Panamby Real Estate Investment Fund, being that, on a second instance, a reflection was cast forward about the operation of some companies from the real estate sector in the totality of their investments/launches in the city of So Paulo, in which it was sought after to understand the space strategies of the real estate activity articulated with the financial sphere and with the civil construction industry. In this sense, it was possible to learn about some urban space production movements through the capitalist real estate residential production, such as the space diversification strategy of the undertakings.

Energy efficiency and CO2 emission reduction are key objectives related to climate change mitigation, sustainable development, and energy resource management. In the Nordic context, energy consumption trends in both the residential and industrial sectors are closely linked to European Union policies, technological innovation, and real estate investments. In recent decades, the development and renovation of the real estate sector has become one of the most important factors determining changes in energy consumption, especially in residential buildings, which remain among the largest energy consumers and polluters. In this context, countries’ efforts to reduce CO2 emissions and increase energy efficiency are inseparable from the real estate sector’s contribution to these processes, by promoting investments in building modernization and energy-saving technologies. However, the real estate sector remains a complex area where economic interests need to be reconciled with environmental objectives, especially in the context of EU strategies such as the Renovation Wave and the Energy Efficiency Directive. This article examines the links between real estate investment, energy efficiency, and CO2 emission reduction, based on quantitative analysis, to assess how the development of the real estate sector and EU policy measures affect sustainable development in Northern Europe. This study uses advanced quantitative methods, including a panel regression model, which helps better reveal the long-term dependencies between investment, energy consumption, and emissions dynamics. This article highlights the importance of the real estate sector in implementing sustainability policies and suggests strategic solutions that can help reconcile economic and environmental priorities.

Pressing societal and environmental challenges influence real estate investment and development. Due to urbanization, gentrification, climate change and resource scarcity, the global call for more responsible and sustainable market behaviour has grown. As such, the notion of CSR has gained global attention in the real estate industry. Today, real estate investors voluntarily explore corporate solutions to societal and environmental issues. They setup organizational units to manage CSR programmes and report on CSR achievements. This has resulted in a vast amount of socially responsible behaviour and investment policies and reports, based on frameworks such as GRI, GRESB, ESG, LEED, BREEAM and WELL, which, in turn, appear to influence the chance for market success, reputation and value of companies.Although this suggests that CSR has become a common feature in the global real estate sector, the origin of CSR and its meaning and implementation in business practice are often unclear to practitioners – especially within Continental Europe. This stems from the fact that CSR is associated with the Anglo-Saxon model of society, and not with the Rhineland model of society which exists in north-western Europe. Yet, due to the connectedness of social and economic systems, the real estate sector in Continental Europe is under influence of AngloSaxon characteristics such as liberalization, privatization and deregulation – ingredients for CSR to flourish. This leads to the following research question: How do real estate investors use CSR to develop sustainable properties?In order to answer the research question, a cross case analysis is performed based upon semi-structured interviews and document review. The cases (i.e., real estate investment companies) are chosen from Anglo-Saxon countries, being the USA and Hong Kong, and from a Rhineland country, being the Netherlands. CSR usage is analysed on (a) the strategic level of the case companies, (b) the institutional level (CSR reporting) and (c) the project level (construction projects). Based upon the common CSR characteristics of the Anglo-Saxon and Rhineland practices – as far as represented by the selected cases – a CSR maturity model for real estate investors is developed. The model is used to rank the maturity of the CSR programmes of the three real estate investors studied.A number of common characteristics are found in the use of CSR. All real estate investors studied (a) use a formal materiality assessment to determine important core business related CSR issues; (b) aim to formulate CSR goals that are specific and measurable; (c) strive to find a CSR management structure that fits the characteristics of the company; and (d) use CSR and sustainability certification methods and reporting guidelines as a structuring device for setting up a CSR policy. Furthermore, it became apparent that only a minor part of the material issues used by the case companies relates to the actual built environment. Finally, the maturity of CSR use by the three real estate investors differs substantially, as illustrated by the higher level of maturity of, in order, the Hong Kongese, American and Dutch case.

The real estate sector has emerged as the bedrock of the Gulf Cooperation Council (GCC) economies, and it has remained resilient despite the various unprecedented micro- and macro-economic shocks devouring the world’s economies. However, wavering investor attitudes and minimal exposure to real estate investment vehicles, coupled with weak regulatory frameworks, have led to dramatic downturns in the sector. Transparency about what is happening in real estate is imperative if the success of high-profile initiatives is to continue and much depends on good corporate governance (CG) in the sector. Using the most recent data from 2019, the current study applies the CG Index (CGI) and CG Deviation Index (CGDI) constructs to the real estate (RE) sector in the GCC in an effort to develop vital indicators for future RE investment decisions in the GCC region. The results indicate that the highest CG adherence levels are being achieved in Dubai, followed by Abu Dhabi and Saudi Arabia. The authors attribute these countries’ success in CG adherence to the entrepreneurial identity of them RE firms as well as to their governance capacity, their socio-cognitive capability, and the level of regulatory enforcement within the context of their dominant governance logic. It should be noted that there are variations in adherence levels throughout each region. The results also agree with prior literature that a higher CGS leads to a lower CGD score, and vice versa. At this point, encouraging more real estate investment trust (REIT) formations in the GCC could ensure value propositions, such as liquidity, to both investors and RE companies as well as solid governance fundamentals. This is strongly recommended for increasing the RE presence and its contribution to the GDP of each country.

After India opened up its economy the FDI flow, Domestic Private Investment has grown by leaps and bounds in the Real Estate Market. But with increase in investment and growth of real estate sector in India, consumers were often defrauded with loopholes existing in the land laws. To address the concern of consumers and to instill accountability in the market the Government of India enacted the Real Estate (Regulation and Development) Act, 2016, which mandates compulsory registration of all residential and commercial real estate projects, promoters and real estate agents under RERA. The grievance mechanism has been made robust and both promoters, real estate agents and investors – allotees, lessors, etc can approach the State RERA Authority when any party or project is in contravention of the provisions of the RERA Act. However, the nation has seen massive scams in the real estate sector and investors should invest cautiously in real estate. The investment in this sector is profitable in long-term as there is illiquidity and price of land and property are rising all times. The Covid-19 pandemic has affected the Real Estate Industry hard post Covid recovery is facing labour shortage, reduced demand, and supply of raw materials at all time low. One of the biggest Property Giant in the world, Evergrande is on brink of bankruptcy with over US $ 300 billion dollars of debt. If a company of such stature fails then the confidence of real estate investors would also go down and the economic spillover would be massive around the world. The Indian Government have proposed several schemes to revamp banks credit functioning and tax exemptions for the real estate investment. With economic recovery expected at 9.5% GDP by Q4 2021 and Q1 2022 the investors’ confidence in the industry is expected to remain and India won’t fall into the traps of 2008 like Recession.

Real estate markets play a crucial role in the economy, providing opportunities for investment and housing. However, there are several challenges in both direct and indirect investment mechanisms affecting its social and financial sustainability. These challenges include high costs, lengthy processes, limited transparency, and restricted investor control. Additionally, the dominance of large investors in the market intensifies these issues, creating barriers to smaller investors. This raises concerns around social inequality and sustainability among small investors, that represent, in number, the largest share of investors. Blockchain technology has emerged as a possible solution to address these issues in the real estate sector, with the potential to improve its long term social and financial sustainability. Features such as smart contracts and tokenization can enhance efficiency, transparency, security, and accessibility in property transactions. In the case of smart contracts, these enable self-executing and automated agreements, and tokenization allows for fractional ownership and increased liquidity. To assess the knowledge and perceptions of professionals in the real estate sector and evaluate the possible impact of the technology in the market, a survey-based methodology was followed. It targeted individuals actively involved in the industry, including professionals from real estate investment companies and real estate agencies. The data revealed that most professionals in the Portuguese real estate market have little to no knowledge about blockchain technology. Yet, those who possess knowledge recognize the potential benefits it can bring to the industry. This lack of awareness can be attributed to the relatively recent emergence of blockchain and its limited discussion within the real estate sector.

After China's market-oriented reform for real estate from 1998, real estate investment has achieved rapid development. The real estate sector has also been becoming a critical approach that the government releases macro policy in China. But with the fast development of the real estate, there is a concern about that the overheated investment in real estate will harm economic growth. A considerable debate on whether the increasing real estate investment is boosting the economy or, in contrast, is hurting the economy is still going on. We are using the ESDA (Exploratory Spatial Data Analysis) to see the spatial dependence on real estate investment and economic development, to find whether they have some similar pattern. The result shows that in the initial year in 2000, the economy led a high in east and low in west pattern. However, real estate investment still had a relatively homogeneous spatial distribution. While in 2018, two of them show a vital characteristic that high in the east and slowly shrinking toward the west, indicating that the developed economy attracted the investment into those areas, which follows the rule of development of the economy. Next, compare the fitness of OLS, GWR, and MGWR to determine the impact of real estate investment on the regional economy. All those three models indicated that the effects from real estate investment to economic development are getting weak, evidence from the data in 2016, 2018 and 2019. In more detail, the result ofMGWR is telling that the contribution of real estate investment to the regional economy is substantial in the east but slowly shrinking toward the west, and in overall, real estate investment has a positive correlation with regional economy. Keywords: real estate investment, regional economy, ESDA, GWR, MGWR

How Strong are the Linkages between Real Estate and Other Sectors in China?

The last two decades have witnessed a growth in foreign direct investments (FDI) in the real estate sector in most of the Organization for Economic Co-Operation and Development (OECD) countries. It is argued that FDI in the real estate sector may improve economic growth in recipient economies. On the other hand, property prices have increased considerably in OECD countries in recent years and some argue that FDI in real estate is one of the driving forces of high property prices in these countries. The purpose of this study is to analyze the interrelationship between FDI in the real estate sector, economic growth, and property prices while controlling for interest rate and inflation. We use observations from a set of OECD countries for the period between 1995 and 2008. The dynamic interrelationship is analyzed by applying a panel cointegration technique. Our empirical results show that FDI in real estate do not cause property price appreciations and also do not contribute to economic growth in OECD countries in the short run and the long run.

After China's market-oriented reform for real estate from 1998, real estate investment has achieved rapid development. The real estate sector has also been becoming a critical approach that the government releases macro policy in China. But with the fast development of the real estate, there is a concern about that the overheated investment in real estate will harm economic growth. A considerable debate on whether the increasing real estate investment is boosting the economy or, in contrast, is hurting the economy is still going on. We are using the ESDA (Exploratory Spatial Data Analysis) to see the spatial dependence on real estate investment and economic development, to find whether they have some similar pattern. The result shows that in the initial year in 2000, the economy led a high in east and low in west pattern. However, real estate investment still had a relatively homogeneous spatial distribution. While in 2018, two of them show a vital characteristic that high in the east and slowly shrinking toward the west, indicating that the developed economy attracted the investment into those areas, which follows the rule of development of the economy. And next, compare the fitness of OLS, GWR, and MGWR to determine the impact of real estate investment on the regional economy. All those three models indicated that the effects from real estate investment to economic development are getting weak, evidence from the data in 2016, 2018 and 2019. In more detail, the result of MGWR is telling that the contribution of real estate investment to the regional economy is substantial in the east but slowly shrinking toward the west, and in overall, real estate investment has a positive correlation with regional economy.
 Keywords: Real Estate Investment, Regional Economy, ESDA, GWR, MGWR

Purpose – The purpose of this study was to analyze how ESG criteria are implementing in allocation decision-making processes assets by real estate investment funds in Poland.Design/methodology/approach – As part of the research project entitled Quality of management of ESG aspects and resilient to crises. Enterprises - financial institutions - local government, planned for 2022-2024 at the Collegium of Business Administration at the SGH Warsaw School of Economics, the focus was on how ESG factors are understood by various economic entities from both the private and public sectors. The researched entities were represented by companies listed on the Warsaw Stock Exchange, financial institutions, in particular, investment funds focused on investing in securities and funds investing in real estate, and local government units. The interdisciplinary research team was divided into research groups depending on the type of entity being the subject of the research. Empirical research was conducted in November / December 2022 in the form of focus group interviews divided into the entities under study. The following section presents detailed conclusions from focus group interviews conducted among selected real estate funds. To the research group in the context of real estate funds, consisted of representatives, among others: asset managers of real estate funds who decide on the selection of real estate for investment portfolios, risk managers, managers responsible for creating products and managers responsible for compliance.Findings – The multi-faceted nature and complexity of the ESG issue is reflected in the broad impact of the issue of sustainable development on the functioning of the entire economy, on the functioning of the real estate sector due to the resource-intensity and emission-intensity of buildings. The results of the above-described research among real estate funds indicate that nowadays ESG factors constitute a key challenge for real estate portfolio managers.Research limitations/implications – Currently, the most important contribution to drawing attention to the need to apply the ESG concept are EU cascading regulations regarding the activities of individual groups of entities. The examined entities face numerous challenges, including: such as: the need to learn and understand changes in regulations and requirements of key stakeholder groups in the field of non-financial aspects of management, awareness of opportunities for sustainable transformation in the context of ESG or developing appropriate competences to use them.Practical implications – From the conducted research, it can be clearly stated that real estate fund managers are striving to create a standardized assessment of real estate sustainability because the expected future value of investment portfolios depends on the degree of their sustainability.Originality/value – The research has tracked how ESG criteria are implementing in allocation decision-making processes assets by real estate investment funds in Poland. The real estate funds participating in the described study are in the initial phase of ESG transformation, at the same time, the people representing them are highly aware of the importance of ESG issues for the entities they represent. In the near future, further identification of criteria should be expected to assess the potential benefits resulting from compliance with ESG requirements by entities from the real estate sector as well as closely related sectors.