International Trek: Shanghai, China

[Excerpt] Beginning their international trek, the Baker Program in Real Estate students visited the Colliers International office in Shanghai. The firm currently has 15,000 professionals and staff in 396 offices in 68 countries across six continents. Colliers has two billion square feet under management and $2.6 billion in annual revenue. Colliers Shanghai is the regional headquarters for east China and the company’s largest office in the country. This office provides a full range of services for industrial, office, retial and residential. Its landmark Shanghai projects include Platinum, L’Avenue, Ecocity, Chamtime Corporate Avenue, and Longyu International Plaza. The Baker Program was honored to be welcomed by Colliers executives Dave Chiou, Senior Director of Research, North, East, and West China, Timothy Chen, Director of Advisory Services, East China, and Jie Li (MPS ’01), Managing Director, North China, and Head of Valuation and Advisory Services, China. They offered students insights into the country’s changing real estate landscape

Globalizing financial valuation: International property consultants in São Paulo

International property consultants (IPCs) have become key intermediaries in the globalization of property markets by providing a range of services that generate transparency and comparability in land and property-based investments. While their role in generating standardized information on local markets is well known, what is less is known is how IPCs help turn property into an income-yielding asset in less developed economies. This article investigates the contested diffusion of financialized valuation approaches in São Paulo’s local property market. Through a qualitative inquiry into large IPCs and their main clients in the city, we show that IPCs have promoted valuation approaches that are tailored to the needs of financial market investors, thus affecting key investment decisions taken by diverse actors. Though these financialized techniques have at times clashed with more traditional views of property ownership prevalent in the country, we show that most often they co-exist with long-established valuation techniques that reflect the social and economic circumstances of Brazil’s economy. The socially contingent nature of property valuation raises theoretical issues concerning the complexity of attributing value to fixed capital, as well as several policy issues

The transition of the Polish real estate market within a Central and Eastern European context

The real estate market in Poland is a relatively immature market, but one that has been experiencing substantial transformation. The development of the market has been encouraged by a number of factors, including changes arising as a result of new legislation and the migration of capital between capital markets. The progress of the real estate sector towards a western style competitive market has taken place within the gradual transformation of the Polish economy into a free market economy. As investment grade property is in relatively short supply in Poland, investors consider opportunities within the wider CEE block. An analysis of the risk-return characteristics of the three largest CEE real estate markets namely, Poland, Hungary and Czech Republic, shows that the returns in these markets have been negatively correlated with the UK. As these economies and markets evolve, and being part of the wider EU trading block, their economic performance will slowly converge and become more synchronized with their western counterparts. However, the catch-up of the CEE markets to western European performance cycles will be protracted and consequently there are likely to be significant ongoing portfolio risk reduction opportunitie

THE RISE OF COWORKING AND THEIR IMPLICATIONS ON TRADITIONAL LEASING MODELS

Coworking, or provision of communal, flexible office spaces on a short-term basis, is a rapidly growing phenomenon in the modern office markets. Coworking was initially driven by the preferences of freelancers, knowledge workers and start-up communities; however more recently the industry has targeted large corporate organisations as their new path of growth. Many landlords are being challenged by this growing demand for flexible, collaborative spaces, and are increasingly looking at how to leverage the benefits of including such spaces within their portfolio. For coworking spaces, landlords are required to revisit traditional lease structures and introduce more creative, alternative means of leasing in order to facilitate new leasing options that provide greater ability to manage volatile headcounts. This conceptual paper analyses the existing literature to identify alternative lease models that can facilitate the growing demand for flexible, scalable and collaborative spaces. The findings identify flex and core leasing model, revenue and profit share model, city campus model, joint venture model and management model as appropriate alternative lease and operating structures for coworking spaces. The findings also identify the advantages and challenges associated with each lease model from the landlord’s point of view. The findings emphasise the importance of having more dynamic and creative lease structures that are better aligned with the interests of landlords, space operators and diverse groups of office space users in flexible office arrangements

The real estate risk premium : A developed/emerging country panel data analysis

The objective of this paper is to identify the determinants of office capitalization rates for a panel of 52 countries (developed and emerging countries) between 2000 and 2006. Our assumption, based on Capital Asset Pricing Model, is that the capitalization rate should be at least proportional to the country’s risk perception, as measured by the risk premium on the 10-year government bond yield. Because of the endogeneity of the latter variable, our empirical methodology requires that we estimate first a model explaining the 10-year bond yield. It will be the occasion to discuss the determinants of the risk premium on the bond market. Using a SURE random effect Hausman-Taylor estimator (Hausman & Taylor, 1981), w also take into account the possible correlation between the country risk characteristics on the bond markets and those that determine the real estate market. Our results show that government bond yield is the main determinant of the capitalization rate. We estimate that 1 percentage point increase in the government bond yield will raisse the capitalization rate by about 0.19 percentage point. Real estate variables play also a role, but to a lesser extent. Turning to determinants of the 10-year bond yield, macroeconomic fundamentals are significant determinants of the country risk premium, especially the capacity to honor short-term financial engagements. In addition, the country’s risk history has also very important effect on the investors’ current risk perception.

The real estate risk premium: A developed/emerging country panel data analysis

The objective of this paper is to identify the determinants of office capitalization rates for a panel of 52 countries (developed and emerging countries) between 2000 and 2006. Our assumption, based on a Capital Asset Pricing Model, is that the capitalization rate should be at least proportional to the country’s risk perception, as measured by the risk premium on the 10-year government bond yield. Because of the endogeneity of the latter variable, our empirical methodology requires that we estimate first a model explaining the 10-year bond yield. It will be the occasion to discuss the determinants of the risk premium on the bond market. Using a SURE random effect Hausman-Taylor estimator (Hausman & Taylor, 1981), we also take into account the possible correlation between the country risk characteristics on the bond markets and those that determine the real estate market. Our results show that government bond yield is the main determinant of the capitalization rate. We estimate that a 1 percentage point increase in the government bond yield will raise the capitalization rate by about 0.19 percentage point. Real estate variables play also a role, but to a lesser extent. Turning to determinants of the 10-year bond yield, macroeconomic fundamentals are significant determinants of the country risk premium, especially the capacity to honor short-term financial engagements. In addition, the country’s risk history has also very important effect on the investors’ current risk perception.

A hybrid property pricing model : the case of apartment residents in Jakarta Indonesia

Purpose: This research initiates a property pricing model that involves various perspectives and consumer considerations in selecting properties, including aspects of sales comparison, investment, hedonic life style, brand equity, and digital life style. Design/Methodology/Approach: The study investigates 222 residents of middle class apartments in Jabotadebek (Great Jakarta). The study employs Structural Equation Modelling (SEM) to test the research hypotheses. Findings: The research found that the price of apartments in the region is strongly influenced by a combination of multi aspects of sales comparison, investment, hedonic life style, brand equity, and digital life style. Practical Implications: The research has implications for investment shows the weakest contribution to the apartment price. Originality/Value: This study found that the price of apartments in the region is strongly influenced by a combination of multi aspects of sales comparison, investment, hedonic life style, brand equity, and digital life style.peer-reviewe

The factors determining office investment markets in South-East Asian cities : with reference to Hong Kong, Singapore, Taipei, Bangkok and Kuala Lumpur

This thesis is the result of four years' intensive study of office investment markets in South-East Asia. The research topic stemmed from the rapid progress in office markets in the region during the early 1990s, and the upheaval resulting from the institutional problems of 1997. Most of the past research on the determinants of office investment markets has concentrated on European and North America cities. South­East Asia and its cities have largely been ignored. The few studies that have been conducted rely mainly on econometric modelling. However, opportunities in the user and investor office markets are influenced by non-econometric factors such as the nature and evolution of the markets and their institutional environment, but these have largely been ignored in previous studies. This research examines office markets by combining a demand and supply econometric framework and institutional analysis. The thesis begins with a presentation of the relevant literature and a critical examination of this branch of knowledge: including a review of forecasting and institutional studies. Subsequently the drivers of office investment markets are investigated using both quantitative and qualitative methods. Five South-East Asian prime office markets are used as case studies: Singapore, Hong Kong, Taipei, Kuala Lumpur and Bangkok. This research initially assesses the maturity of office markets in each city. A time-series multiple regression analysis is then carried out, using office rental data and macroeconomic data to identify the relationship between office rental values and macroeconomic variables in the five cities. The results of a questionnaire survey and face-to-face interviews are then presented, which were conducted with property researchers in the region, and from these, the institutional factors which have an impact on office investment market performance are identified. The study concludes that the performance of office investment markets ( office rental values) can be modelled using macroeconomic factors in the cases of mature cities, such as Singapore and Hong Kong. However, office investment market performance can only partly be explained by macroeconomic factors in emergent markets (Kuala Lumpur, Taipei and Bangkok). The results of the econometric analysis show that demand side variables are the main drivers for office investment market performance in South-East Asian cities. Institutional factors also have an impact on office investment market performance. This research shows that legal and economic institutional factors and political stability are considered to have the most influence on office investment market performance in South-East Asian cities, especially in Kuala Lumpur, Taipei, and Bangkok (emergent markets), though the effects cannot be quantified in modelling studies. As regards Singapore and Hong Kong (both mature markets), econometric modelling results perform reasonably well, and institutional factors have little influence on office investment market performance in those cities