Property Fund Managers Research Articles

Outer-suburban politics and the financialisation of the logistics real estate industry: The emergence of financialised coalitions in the Paris region

Logistics real estate is a type of property rarely covered in the existing literature on the financialisation of property markets. The emergence of specialised international real estate firms, which act as developers, investors and property fund managers, means that the logistics real estate industry has taken a unique financialisation path. The present article explains the specific features of the financialisation of the logistics real estate industry and contributes to the understanding of the financialisation of outer-suburban governance. Based on a qualitative analysis of the European logistics real estate market and case studies conducted in the Greater Paris region, the article combines an analysis of the sociotechnical mediations of financial circuits in the logistics built environment with the study of emerging local public–private coalitions formed to develop logistics zones. As such, it will be seen that the domination of integrated global firms in logistics real estate depends on their capacity to form local coalitions.

Investigation into the Relatively Low Uptake of Residential Stock within South African Real Estate Investment Trusts

Since the establishment of the first South African Real Estate Investment Trust (REIT) in 2013, the listed property sector has seen significant growth with a current market capitalisation of R400 billion in comparison to 1998 where the market capitalisation was R5 billion. However, South African REITs invest less in the residential sector when compared to the global REIT market. The purpose of this research was to determine the factors that have attributed to this low uptake of residential stock. This was achieved using a qualitative survey consisting of semi-structured interviews with listed property fund managers and upper management from four REITs listed on the South African stock exchange. The findings indicated a number of factors that have influenced the low uptake of residential stock. These have been identified as the financial performance of residential real estate in South Africa, the nature of residential real estate, and the maturity of the REITs sector in South Africa. These findings make a valuable contribution to the very limited literature on REITs in South Africa. Furthermore, understanding these factors is crucial in further developing the REITs sector in South Africa which has the potential to catalyse broader developments for housing and the economy.

Solutions for Thai Property Funds’ Performance Improvements

A regulatory repeal of Thai property funds has faced limitation of raising capital to acquire new assets for improving the overall performances. Since they can decide not to convert to be a new form of Real Estate Investment Trust (REIT) owing to disincentives of tax benefit loss and conversion cost, it is a cry for discovering workable solutions to enhance existing funds’ performances to maintain strong performance without the capital increase approach. Among twenty discussed methods in the research, fourteen workable solutions were proposed by forty one interviewees, some of which are consistent with the other studies. On the contrary, few discussed methods are inconsistent with others, i.e. incentive and management fee in a form of share to the fund manager owing to perception of inactive role of the Thai property fund managers when compared to those of the international REITs. The remaining four approaches were discussed to be unfitting for utilization. Looking forward, Thai funds might grow and increase their performances by utilizing number of workable solutions under the circumstances of non–existence of Thai property fund regulation to support inorganic growth opportunities.

Heuristic-driven bias in property investment decision-making in South Africa

Purpose– The purpose of this paper is to determine whether anchoring and adjustment as heuristic-driven bias and herding behaviour influences listed property fund managers in South Africa’s property investment decisions. The study contributes to the understanding of the influence of heuristic-driven bias and herding behaviour on property investment decisions made in a highly volatile environment.Design/methodology/approach– This study is focused on the subject field of behavioural finance and follows a survey-based design. A questionnaire was finalised after completion of the pilot study and was sent via e-mail to fund managers of all South African-based property funds listed on the Johannesburg Securities Exchange. Non-parametric statistical measures were used.Findings– Consistency with other studies suggests that anchoring and adjustment may exist in the decisions made by listed property fund managers. However, fund managers tend to not adjust to new information due to the current socio-political environment in South Africa rather than a lack of understanding of the new information.Practical implications– It is recommended that investors form developed and emerging economies take notice of the highly volatile circumstances in which property fund managers in an emerging economy such as South Africa have to make investment decisions. The probability of missed gains as a result of conservative investment strategies may have an impact on future returns.Originality/value– This study enhanced the understanding of the role that heuristic-driven bias plays in the South African property industry and more importantly, it went some way towards enhancing understanding of behavioural aspects and their influence on property investment decision making in an emerging market.

Government Influences, Emotions, and the Investment Decisions of South African Property Fund Managers

Efficient investment decision-making is a function of a free and efficient market. Government interference may distort such efficient markets and subsequent investment decision-making. We investigate the role of emotions in property fund managers' decisions and the extent of the influence of government actions on these decisions. The results show that property fund managers perceive the influence of national and local government actions on their investment decisions as negative with a feeling of regret towards these investment decisions made. It also shows the volatility of the South African property fund decision-making environment and its associated difficulties.

The Influence of Frame Dependence on Investment Decisions made by Listed Property Fund Managers in South Africa

Behavioural finance describes investors’ and managers’behaviour in terms of their interactions, andhow their behaviour subsequently influences financial and capital markets. One aspect of behavioural finance, frame dependence, reflects the fact that decision-makers may model decisions about problems using subjective frames. Such decisions may lead to errors in judgement. This study’s objective was to determine whether frame dependence influences listed property fund managers in South Africa’s property investment decisions.Therefore, the study examinedquestionsrelating to the disposition effect and loss aversion,as well asfactors influencing selling decisions and the time and difficulty involved in making buying and selling decisions. The study surveyed the fund managers of all South African-based property funds listed on the Johannesburg Securities Exchange (JSE). Non-parametric statistical measures were used.The resultsreveal the presence of the disposition effect and a strong desire to cut losses as a motivating factor to sell a property. In the context of the difficulties associated with, and time spent in, buying new properties, it appears that South African property fund managers are, to some extent, lossaverse. This study recommends that fund managers be alerted to the presence of frame dependence in their decisions, so that they canincorporate it in their normative investment strategies.They need to know that they are loss averse in their investment decision-making, resulting ina possible loss of perfectly positioned, profitable investment opportunities. This study expands the body of knowledge surrounding property investment decision behaviour in an emerging market.

Use of Derivatives by Australian Property Funds

Property derivatives as a financial tool have gained increasing attention by practitioners in recent years. However, there is relatively little evidence on the patterns of use and the property funds ‘ attitudes with respect to derivatives. Therefore, this study seeks to address this shortfall and aims to examine the application of derivatives by Australian property funds. A survey of Australian property fund managers was undertaken. The results show that different types of property funds have exhibited various patterns regarding the use of derivatives. The results also reveal that large property funds are more likely to use derivatives. The motivation factors (namely to reduce cash flows volatility and hedging currency risk) and risk factors (development of internal control and complicated accounting procedures) for using derivatives have also been identified. In addition, significant differences are found between the perceptions of derivative users and non-users. The findings have offered some insights into the knowledge base of property investors towards derivatives.

A behavioural study of the decision processes underpinning disposals by property fund managers

Purpose – The main aim of this paper is to investigate the specific factors that influence fund managers' decisions to dispose of property.Design/methodology/approach – This study explores the reasons behind the decision‐making processes associated with the disposal of real estate within a portfolio, and the information sources utilised by fund managers. A behavioural finance approach is adopted with the field research carried out as a survey‐based analysis of the disposal decisions made by fund managers in the UK property fund market.Findings – The main reason for disposal of an investment is due, in part, to re‐structuring the portfolio. This is also linked to under‐performance of the asset involved, and current market expectations. The implications for the study are that it identifies that there are links between rational and irrational behaviour in the selection of assets, not only for disposal, but also in terms of investment as a whole. This can be based on the inefficiency of the property market, a...

An Investigation on the Risk Perceptions of Australian Property Fund Managers

Recent empirical and analytical studies have demonstrated that downside risk appears as an intuitively appealing risk measure in which it is more consistent with investors’ behaviour. Conversely, qualitative studies into the behaviour of investors, particularly real estate investors, have been relatively limited. This study seeks to address this shortfall and aims to examine the perceptions of property fund managers towards risk. A survey was conducted to investigate the risk perceptions of property fund managers and determine whether they only require compensation for bearing with higher downside risk. The acceptance level of downside risk is also examined. The findings reveal that downside risk is more consistent with how investors individually perceive risk. However, there is also a gap between theoretical assertions and practice in which downside risk is not commonly used in the practice. The results give an insight into the knowledge base of property investors towards risk, particularly downside risk.

The Changing Importance of Sector and Regional Factors in Real Estate Returns: 1987–2002

A stylized fact in the real estate diversification literature is that sector (property type) effects are relatively more important than regional (geographical) factors in determining property returns. Thus, for those portfolio managers who follow a top‐down approach to portfolio management, they should first choose which sectors to invest in and then select the best properties in each market. However, the question arises as to whether the dominance of sector effects over regional effects is constant. If not, property fund managers will need to take account of regional effects in developing their portfolio strategy. Using monthly returns data for individual properties over the period 1987:1 to 2002:12, this paper investigates the influence of sector and regional factors on commercial real estate performance, first by adopting the dummy variable approach of Heston and Rouwenhorst (1994, 1995) and then by using the notion of cross‐sectional dispersion introduced by Solnik and Roulet (2000). The results show that sector‐specific dominate region‐specific factors for the majority of the time and, in particular, during volatile periods of the real estate cycle. However, during calmer periods, sector and regional effects appear to be of equal importance. Overall, sector effects are still the most important aspect in the development of an active portfolio strategy.

The Impact of Information Transparency and Market Capitalisation on Out-Performance in Asian Property Companies

With an increased emphasis on international property investment and an improved economic outlook for Asia, Asian property companies potentially provide an important property investment opportunity for international property fund managers. Using an information transparency index, 180 property companies in 10 Asian countries are assessed over 1997-2003 for their levels of information transparency. Whilst information transparency is seen to be important, market capitalisation is seen to be more significantly associated with Asian property company out-performance. Investing more in the larger property companies than the smaller property companies in Asia is seen to be a more effective property investment strategy for international property fund managers over this period.

Isolating Important Driving Forces in Indirect Real Estate Markets

Executive Summary. Isolating the important driving factors in property markets is of continuing interest to both property analysts and fund managers. Ascertaining permanent driving factors may be of interest to strategic asset allocation while transitory factors may be of interest in the development of tactical asset allocation models. This study uses established methodologies to decompose driving factors affecting indirect property markets in Australia into their permanent and transitory components, paying attention to the impact of structural breaks. Various restrictions on the long-run cointegration matrix are also applied to identify those variables that may be considered drivers of property markets.