Private Real Estate Research Articles

An investigation of housing provision strategies adopted by private developers in Lagos, Nigeria

This article investigate the housing provision strategies adopted by private real estate development firms in Lagos, Nigeria with a view to providing information that could enhance housing provision in the country. Primary data utilized for the study were collected through the use of questionnaire administered on the managing partners or head of operations in case of head offices and branch offices of all the 87 private real estate development firms registered under the umbrella of Real Estate Development Association of Nigeria (REDAN) in Lagos State. Data collected were analyzed using descriptive statistics and a one-sample t-test. The result shows that turnkey and presale housing provision strategies were the mostly adopted and effective strategies in the study area while pre-letting is the least adopted strategy. The study also indicated a significant relationship among the housing provision strategies except for Joint finance/Venture, Pre-letting and shell stage Housing. It also provides insight to policymakers and investors on the housing provision strategies that encourage more housing units and serves as a blueprint for decision making. Turnkey and presale housing provision strategies has potential to reduce housing shortage in Nigeria and should be encouraged among private developers.

Funding Modalities for Timber Housing in Brazil

Abstract This paper investigated the existence and participation of public and private real estate credit lines for timber house funding in Brazil. The analysis was completed through face-to-face interviews with Brazilian timber housing producers. Semi-structured questionnaires were applied in this survey method to obtain a sectorial approach of the industry. Accesses to full financing for timber housing and credit for the acquisition of construction materials were the main two issues studied. About 107 producers were fully evaluated from all sectors. Half of the studied companies offer full housing finance and, simultaneously, most loans still come from private banks. Credit directed to raw materials emerges as the most common method of accessing funding for timber-based construction despite the lower economic value of this form of credit compared to other, more complete financial options. Public banks disseminate partial credit more frequently because of lower rates and lower restrictions, such as the absence of insurance requirements against risks from these construction ventures. Full funding proliferation will stimulate this market.

Private and Public Real Estate - What's the Link? (May 2010)

In this paper, we study the relationship between private and public real estate in the US and UK markets. We demonstrate a strong link between public and private real estate returns in each of these markets. To uncover these relationships, we correct for appraisal smoothing and properly account for the lead-lag relationship between public and private returns. We find that public returns lead private returns, even after removing appraisal smoothing in private returns. We also discuss how real estate risk changes over longer horizons. In particular, our results suggest that private and public returns become more correlated at longer investment horizons. This carries important implications for risk management and strategic asset allocation.

The risk and return of private equity real estate funds

This study employs an asset pricing approach to quantify the exposure of private real estate funds to both private and publicly traded real estate risk factors. The analysis includes the creation of specific performance indices and the use of methods seeking to address some of the inherent issues with private real estate fund data, such as the high degree of serial correlation in observed total returns. The use of the Driessen et al. (2012) estimator leads to markedly higher risk factor coefficient estimates than seen in the prior literature and estimated with time series regression.

How the Widespread Presence of Historical Private Real Estate Can Contribute to Local Development

For decades, historical assets have been considered, particularly real estate, as a heritage to be conserved, but limiting the use to museums. The concept of enterprise was considered far removed, if not an indication of the dangerous commodification of the aforementioned assets. On the one hand, the emergence of an ever-increasing demand for cultural services connected to this patrimony, and, on the other hand, the increasing difficulties in finding adequate resources for the conservation of the latter, have pushed a greater number of operators to take into consideration the instrument of cultural industry, the latter whose goal is to secure resources for the maintenance of the artistic historical patrimony by exploiting the potential of the same. Italy is an important test for this challenge, because it can count on an intense pool of historical and artistic heritage, that is unique and unrivalled in the world.
 
 In this paper, therefore, we try to relate the investments necessary for the conservation and enhancement of the Italian private historical real estate assets, with the concentration of the aforementioned in certain realities and with the current local economic development of cultural and creative industries.
 
 The cross analysis shows clearly how the enhancement of private real estate assets is particularly relevant in smaller cities and can represent a stimulus for a specific economic, social and cultural growth model.
 
 However, this opportunity at the local level is unfortunately not always cultivated, therefore, we call for a comprehensive set of structural, long-term interventions in the sector, both at national and supranational level, for not only economic but social revival of private historical heritage.

Developer constraints on housing supply in urban Ghana

PurposeThis study aims to document the major underlying forces prohibiting housing development in urban Ghana. Previous studies in Ghana have not empirically examined these constraints, but an empirical examination of these factors would help to formulate proper policies to address the housing shortage problems in Ghana. This paper fills this gap.Design/methodology/approachUsing a purposive sampling technique, the authors surveyed the chief executive officers (CEOs) of private real estate development companies within Accra and Tema with a Likert scale questionnaire to measure the severity of the factors hindering housing development in these areas.FindingsThe results show that real estate developers consider the supply problems in housing to be driven mainly by formal and informal institutional factors. A large percentage of the CEOs reported that land tenure arrangements, lengthy procedure involved in securing building permits and process of land acquisition and registration in Ghana were the major factors that significantly affected housing supply. The difficulty in accessing development funds, underdeveloped mortgage market and high interest rates were some of the market-based factors constraining housing development.Originality/valueThis study empirically examines the factors that hinder housing development in Ghana, making a clear distinction between the market and institutional forces. The paper proposes policy recommendations for a more effective and direct government intervention to improve urban housing supply.

Stale Prices, Fragility, and Detrimental Cash: Evidence from Private Real Estate Funds

This paper documents a new source of financial fragility and studies its interactions with common stabilization tools. Economists believe funds report stale Net Asset Values (NAVs) when they invest in illiquid assets. This staleness creates return predictability, NAV-timing risks, and fund fragility risks for open-end funds. However, because their assets are illiquid, managers limit fund flows to deter buying assets at a premium or selling them at a discount. Limiting flows has the secondary effect of protecting against the risks stale NAVs create. Interestingly, illiquidity in the underlying assets creates the opportunity for, and the friction against, exploiting buy-and-hold investors.

Gradovi kao načini stvaranja sveta

The theme of "Ways of Worldmaking" appears in the writings of philosophers such as Ernst Cassirer and Nelson Goodman. Cassirer takes up this theme in Language and Myth (Tr. by Susan Langer (Harper, 1946)), and Goodman addresses "The Ways of World Making" in his book bearing the same title (Hackett, 1978, 1981). Both philosophers cite the arts as key ways of world making in their function as various forms of symbols. Following the insights of Cassirer and Goodman, "Ways of Worldmaking" is explored here first in reference to an imaginative world making roles of works of the arts that relate to cities. Examples including the literary works of J. R. R. Tolkien, an opera by Kurt Weill and Berthold Brecht, a film by Chinese artist Xu Bing, New York's Hudson Yards, the biggest private real estate development in US history to date, are used as instances of worldmaking in the arts and city development.

Analysis of net-zero energy housing society in Gwadar Pakistan to mitigate the load shedding problem

Pakistan has power shortages and the buildings in Pakistan consume 54% of generated electric power, while the country is at the 7th place in the list of countries most affected by extreme weather events. Pakistan not only has to produce more power but also must employ renewable energy resources to achieve the task to have a sustainable future. The government of Pakistan has already forsaken the task to produce power at a national level and has sublet this job to independent power producers. The prime investments of Pakistani people are in the real estate business with private real estate giants operating in the country. In this research, a net-zero energy housing society (NZEHS) has been analyzed in the future economic hub, the city of Gwadar at the Arabian Sea. Abundant renewable resources are available at Gwadar city with a global horizontal irradiance of 5.19 kWh/m2 day and an average wind speed of 5.19 m/s. A combination of photovoltaic (PV) and wind turbines has been selected with installed capacities of 32.2 MW and 25.5 MW, respectively, to generate energies of 55.9 GWh and 49.0 GWh annually for an electrical load of 101.3 GWh. The net present cost of the system is 149 Million US$ with a Levelized cost of energy of 7.91 CUS$/kWh. The capital cost for this project is 92.4 Million US$. In this NZEHS, each customer must pay 0.0132 MUS$ to get free electricity for 25 years with a simple payback of 4.78 years and a discounted payback period of 5.79 years. This sustainable society will reduce the energy demands from residential loads to provide power for smaller industries to improve economics and reduce unemployment in Pakistan.

Hyper‐planning Jakarta: The Great Garuda and planning the global spectacle

After a major flood in Jakarta in 2007, the government of Indonesia partnered with a consortium of Dutch engineers and designers to produce a solution. In 2013, this consortium proposed a plan for the Great Garuda, a megaproject that combined a deep seawall and private real estate, both in an archipelago of reclaimed islands that would be shaped like the mythical garuda eagle, Indonesia's national symbol. Despite a range of infeasibilities and opposition, the Great Garuda became the most prominent vision for the city's future. This article argues that the promotion of the Great Garuda was a process of ‘hyper‐planning’, which projected the city as a national triumph and a global spectacle. The plan served the political objective of creating the mere possibility of a ‘new Jakarta’ apart from the perceived chaos of the current capital. Further, the plan functioned as a performative object through its iconic imagery and its circulations. The process of hyper‐planning simultaneously projected a future of urban success, but also displaced the contingencies of the future to the private sector, beyond the purview of the state.

Machine Learning based Prediction of The Value of Buildings

Due to the lack of visualization services and organic combinations between public and private buildings data, the usability of the basic map has remained low. To address this issue, this paper reports on a solution that organically combines public and private data while providing visualization services to general users. For this purpose, factors that can affect building prices first were examined in order to define the related data attributes. To extract the relevant data attributes, this paper presents a method of acquiring public information data and real estate-related information, as provided by private real estate portal sites. The paper also proposes a pretreatment process required for intelligent machine learning. This report goes on to suggest an intelligent machine learning algorithm that predicts buildings’ value pricing and future value by using big data regarding buildings’ spatial information, as acquired from a database containing building value attributes. The algorithm’s availability was tested by establishing a prototype targeting pilot areas, including Suwon, Anyang, and Gunpo in South Korea. Finally, a prototype visualization solution was developed in order to allow general users to effectively use buildings’ value ranking and value pricing, as predicted by intelligent machine learning.

Evaluating the cost and benefits of earthquake protection of buildings

PurposeThe purpose of this study is the evaluation of the cost and benefits of earthquake protection of buildings to verify whether the legislative push, through tax incentives, will produce results and lead to a redevelopment of private real estate assets.Design/methodology/approachThrough contingent valuation, this research aims to measure the propensity of homeowners to invest in the seismic security of their properties. The sample of homeowners was selected in a southern Italy city, which was characterized by a medium-high seismic hazard. The willingness to pay, once made independent from the family income, was compared with the actual cost of a seismic retrofitting technique to assess its cost-effectiveness.FindingsThe analysis developed on an example case shows that the economic sustainability of the intervention is only verified when considering the current tax incentives for this type of intervention.Practical implicationsChoosing to introduce a system to compulsory insurance against seismic risk could certainly be a strong incentive for the implementation of retrofitting interventions on private real estate assets. In this direction, investigations like this can be fundamental to establish the fair risk premium.Originality/valueThe need for effective seismic risk mitigation policies is also based on the growing awareness of the, often fatal, effects of seismic events, emphasized by the recent medium and high intensity events that hit Italy. The issue of the security of residential buildings is therefore a very topical issue in view of their high seismic vulnerability and the vast number of buildings requiring major seismic retrofitting. Therefore, the propensity of owners to intervene in improving the seismic performance of their properties can be crucial in seismic risk mitigation.

Expert problem solving practice in commercial property valuation: an exploratory study

PurposeThe purpose of this paper is to identify the core dimensions of problem solving of experts in commercial valuation in order to provide a rich stimulus for managing current practice and enabling future development.Design/methodology/approachThe study adopted a cognitive position but emphasised understanding the everyday commercial property valuation practice in a naturalistic context and from the participants’ perspectives. Given this, a grounded theory approach was employed as a research strategy to guide the data collection and surface theoretical interpretations. Data were obtained through in-depth interviews with practicing valuers working in private real estate firms within metropolitan Birmingham, UK.FindingsThe interviews uncover four dimensions of experts’ problem-solving practice in commercial valuation: multidimensional, domain-specific knowledge base; cognitive process that is centred on analysis and reflection; collaborative problem-solving venture with colleagues; and professional practice issues awareness. A conceptual model is proposed which integrates these dimensions enabling a clearer understanding of the nature of valuation work.Research limitations/implicationsThis study was designed to be descriptive and theory generating, thus, the findings cannot be generalised as the sample was confined to one city and consists of a small number of senior practicing valuers. Therefore, the findings may not be fully applicable to other practicing valuers, other geographical locations or more widely to other types of property valuation. Nevertheless, the findings provide an important cognitive framework which can be verified by other researchers seeking to examine the practice of expert valuers.Practical implicationsThe identification of the core dimensions of expert problem solving in commercial property valuation is shown to have implications for valuation practice, education and continued research. The valuation practice environments need to develop mechanisms to provide time that would enable these multi-dimensions of professional competence to be developed. Further work is needed to expand and refine the model across expert practice in other specialty areas of valuation practice.Originality/valueThis study expands the current understanding of valuation process to areas of expertise that have received less coverage in behavioural valuation literature, that is, the central role of knowledge and cognition and how these are integrated for effective valuation problem solving and decision making.

'REITarization' Effects on Global Real Estate Markets

The creation of real estate investment trusts (REITs) facilitates the conversion of illiquid commercial real estate assets into liquid tradable securities in the public market space. The process increases liquidity and generates significant growth in cross-border real estate transactions. This study uses a large sample of proprietary commercial real estate transactions data from more than 73 countries within the sample period of 2001 through 2015. We investigate the impact of REIT creation on international real estate capital flows. Using non-REIT countries as the control group, we show that REITs open a new channel to attract institutional investments in real estate. New investments in real estate by both local institutional investors and foreign investors increase in REIT countries relative to non-REIT countries. The results imply that there is no substitution effects of REITs on private real estate market activities. We also find no evidence of “crowding out” effects on local investors, as we do not observe significant changes in the outflows of real estate capital. The relatively large increases in domestic real estate investments have caused declines in the shares of cross-border real estate capital flows in the post-REIT regime.

A Behavioral Interpretation of the NAV Discount Puzzle in Listed Real Estate Companies (Version Aug 2017)

The NAV discount is a long standing puzzle in the listed real estate context. In this paper we extend the existing literature’s rational and noise trader explanations by exploring the influence of specific irrational behaviors. Based on behavioral biases identified in the stock and real estate markets, we hypothesize the existence of a relationship between lagged NAV growth and the NAV discount. The findings provide initial evidence of trend-chasing behavior between the dual real estate markets. The results have broader implications for the perception of the relationship between public and private real estate markets.

Real Estate Betas and the Implications for Asset Allocation

Real estate is an important asset class, but what specifically does real estate contribute to improve diversified stock–bond portfolios? The author decomposes real estate investment trust returns into their factor betas to show that real estate is a hybrid asset class, with returns explained by a rich mix of compensated risk factors plus uncompensated sector risk. He shows that the same is true for private real estate, but with the additional contribution to risk from misappraisals. It is the rich mix of common factors contained in real estate that can improve the Sharpe ratios of diversified, multiasset portfolios. He discusses the implications for asset allocation from the perspectives of mean–variance optimization of asset classes, the capital asset pricing model with efficient markets, and factor-based asset allocation. <b>TOPICS:</b>Real estate, portfolio construction

Shadow banking in Asia: Foreign versus domestic lending to real estate projects

We compare the types of loans and their rates of returns for domestic versus offshore small and mid-sized private real estate credit funds. The data indicate offshore private credit funds issue smaller and subordinated loans to residential projects. Offshore lenders prefer projects in developed Asian markets, and obtain higher rates of return even after controlling for other things such as loan size, seniority, and borrower location. Our findings suggest the presence of pronounced segmentation across real estate lending markets in Asia as offshore lenders are not a substitute for domestic capital.

The Anatomy of Public and Private Real Estate Return Premia

Market-wide, stock market specific, and real estate market specific risk – what kind of risk and to which extent drives the returns of listed real estate? Based on a structural asset pricing model calibrated to the empirical data in the U.S., we show that at least two thirds of the risk premium of listed real estate are driven by the same factors as direct real estate. Our results shed new light on the risk-characteristics of listed real estate returns and are of high interest for academics, regulators, and portfolio managers alike.

Time Variation in the Allocation to Real Estate Assets through the Life Cycle

Executive SummaryWe investigate the performance of allocations to public and private real estate using dynamic retirement portfolio strategies. Our approach frames asset allocation decisions to real estate with the primary objective of maximizing retirement outcomes. The main innovation in this paper is that allocations to listed and unlisted real estate are formally incorporated into a dynamic framework that can be implemented by defined contribution (DC) retirement plans. We demonstrate that the time-variant characteristics of real estate as an asset class can be systematically exploited to improve the risk-return trade-offs in retirement portfolios through the lifecycle of a DC plan member.

A Behavioral Interpretation of the NAV Discount Puzzle in Listed Real Estate Companies

Executive SummaryThe net asset value (NAV) discount is a long standing puzzle in the listed real estate context. In this paper, we extend the literature's rational and noise trader explanations by exploring the influence of specific irrational behaviors. Based on behavioral biases identified in the stock and real estate markets, we hypothesize the existence of a relation between lagged NAV growth and the NAV discount. The findings provide initial evidence of trend-chasing behavior between the dual real estate markets. The results have broader implications for the perception of the relation between public and private real estate markets.