The Growth of Private Property Vehicles in the UK: Causes and Conditions

The UK private indirect real estate market has seen a rapid growth in the last seven years. The gross asset value (GAV) of the private property vehicle (PPV) market has about tripled from a GAV of £22.6bn in 1998 to a GAV of £67.1 billion at the end of 2005 (OPC, 2006).  Although this trend of growing syndication of real estate is not only a UK phenomenon, the rate of growth has been significantly faster in the UK. For example the German open-ended funds have grown over the same period from €50.4bn to €85.1bn (BVI, 2006). In the US the market capitalization of equity real estate investment trusts (REIT) has grown 155% since 1999 to US$ 301bn (NAREIT, 2006). Each jurisdiction is offering different formats to invest indirectly into real estate but at the core all these vehicles are the same in that they provide a different route for investors to access real estate. In the UK, although the range of ‘products’ is now quite diverse, all structures have in common the ‘wrapping’ of property assets into a multi-investor vehicle. This paper examines the nature, pattern and process of market growth in PPVs and constructs a series of associations between causes and effects to explain this market shift. Private Property Vehicle, PPV, REIT,

Deliberate ignorance in project risk management

The management of project risk is considered a key discipline by most organisations involved in projects. Best practice project risk management processes are claimed to be self-evidently correct. However, project risk management involves a choice between which information is utilized and which is deemed to be irrelevant and hence excluded. Little research has been carried out to ascertain the manifestation of barriers to optimal project risk management such as 'irrelevance'; the deliberate inattention of risk actors to risk. This paper presents the results of a qualitative study of IT project managers, investigating their reasons for deeming certain known risks to be irrelevant. The results both confirm and expand on Smithson's [Smithson, M., 1989. Ignorance and Uncertainty. Springer-Verlag, New York] taxonomy of ignorance and uncertainty and in particular offer further context related insights into the phenomenon of 'irrelevance' in project risk management. We suggest that coping with 'irrelevance' requires defence mechanisms, the effective management of relevance as well as the setting of, and sticking to priorities. (C) 2009 Elsevier Ltd and IPMA. All rights reserved

Private Property Vehicles: The Valuation of Interests in Limited Partnerships

This paper examines the extent to which the valuation of partial interests in private property vehicles should be closely aligned to the valuation of the underlying assets.    A sample of vehicle managers and investors replied to a questionnaire on the qualities of private property vehicles relative to direct property investment. Applying the Analytic Hierarchy Process (AHP) technique the relative importance of the various advantages and disadvantages of investment in private property vehicles relative to acquisition of the underlying assets are assessed.  The results suggest that the main drivers of the growth of the this sector have been the ability for certain categories of investor to acquire interests in assets that are normally inaccessible due to the amount of specific risk.  Additionally, investors have been attracted by the ability to ‘outsource’ asset management in a manner that minimises perceived agency problems.  It is concluded that deviations from NAV should be expected given that investment in private property vehicles differs from investment in the underlying assets in terms of liquidity, management structures, lot size, financial structure inter alia.  However, reliably appraising the pricing implications of these variations is likely to be extremely difficult due to the lack of secondary market trading and vehicle heterogeneity. Private Property Vehicles, PPV, Valuation

The influence of intervening conditions on the over-and underestimation of risk

Project risk management is the systematic utilisation of a process by project managers to identify, analyse and respond to risks posed by events and conditions that are not definitely known in advance but which may adversely affect IT project success. However, although best practice standards in project risk management are applied in information technology (IT) project management, IT project managers seem unable to accurately predict and manage risk. Thus, this study aims to investigate the extent to which project managers in IT project over- and underestimate risk and to what degree their failure in accurately managing risks influences is caused by risk related factors. Findings indicate that project managers tend to considerably under- and overestimate risk. The underestimation of risk is found to have been caused by factors such as lack of knowledge or the preference to wait until risk materialises. An important implication of the research is that the prevention of these causative risk related factors may enable IT projects to increase the accurateness of their predictions regarding project risk and subsequently to increase the effectiveness of project risk management

The growth of private property vehicles in the UK: causes and conditions

The UK private indirect real estate market has seen a rapid growth in the last seven years. The gross asset value (GAV) of the private property vehicle (PPV) market has about tripled from a GAV of £22.6bn in 1998 to a GAV of £67.1 billion at the end of 2005 (OPC, 2006). Although this trend of growing syndication of real estate is not only a UK phenomenon, the rate of growth has been significantly faster in the UK. For example the German open-ended funds have grown over the same period from €50.4bn to €85.1bn (BVI, 2006). In the US the market capitalization of equity real estate investment trusts (REIT) has grown 155% since 1999 to US$ 301bn (NAREIT, 2006). Each jurisdiction is offering different formats to invest indirectly into real estate but at the core all these vehicles are the same in that they provide a different route for investors to access real estate. In the UK, although the range of ‘products’ is now quite diverse, all structures have in common the ‘wrapping’ of property assets into a multi-investor vehicle. This paper examines the nature, pattern and process of market growth in PPVs and constructs a series of associations between causes and effects to explain this market shift

Beyond Land Titling for Sustainable Management of Agricultural Land: Lessons from Ndome and Ghazi in Taita-Taveta, Kenya

This paper is based on a 1996-1999 case study that was done in semi-arid Ndome and Ghazi, Taita-Taveta District, in Kenya to determine the root causes of persistent erosion damage in the area. More than 10 years after land adjudication was done in these areas, more than 70% of the farmers still operate under tenure insecurity mainly due to lack of title deeds (r = 0.94**). Contrary to conventional expectation of land development, owning of land under private property rights was motivated by the sense of belonging, wealth, power and to some degree for speculative purposes. Adoption of structural soil and water conservation measures was still well below 50%. Preference was still given to indigenous land and water management (ILWM) technologies, with adoption ratesranging from 60% to more than 90%. No evidence existed that directly linked land improvement to land titling. For sustainable land management, land titling remains a critical incentive to farmers. However it will have to be accompanied by land use policy reforms that address four main issues, thus: deliberate efforts to preserve agricultural land, equitable distribution of available land, putting as much land as possible to agriculturaluse, and mechanisms to enhance prevention and control of land degradation. How these objectives can be achieved within the Kenyan context is the conceptual gist of this paper

Private property vehicles: the valuation of interests in limited partnerships

This paper examines the extent to which the valuation of partial interests in private property vehicles should be closely aligned to the valuation of the underlying assets. A sample of vehicle managers and investors replied to a questionnaire on the qualities of private property vehicles relative to direct property investment. Applying the Analytic Hierarchy Process (AHP) technique the relative importance of the various advantages and disadvantages of investment in private property vehicles relative to acquisition of the underlying assets are assessed. The results suggest that the main drivers of the growth of the this sector have been the ability for certain categories of investor to acquire interests in assets that are normally inaccessible due to the amount of specific risk. Additionally, investors have been attracted by the ability to ‘outsource’ asset management in a manner that minimises perceived agency problems. It is concluded that deviations from NAV should be expected given that investment in private property vehicles differs from investment in the underlying assets in terms of liquidity, management structures, lot size, financial structure inter alia. However, reliably appraising the pricing implications of these variations is likely to be extremely difficult due to the lack of secondary market trading and vehicle heterogeneity