Emerald | Journal of Property Investment & Finance | Table of Contents http://www.emeraldinsight.com/1463-578X.htm Table of contents from the most recently published issue of Journal of Property Investment & Finance Journal en-gb Tue, 29 Jul 2014 00:00:00 +0100 2013 Emerald Group Publishing Limited editorial@emeraldinsight.com support@emeraldinsight.com 60 Emerald | Journal of Property Investment & Finance | Table of Contents http://www.emeraldinsight.com/common_assets/img/covers_journal/jpifcover.gif http://www.emeraldinsight.com/1463-578X.htm 120 157 Property investment decision making by Australian REITs http://www.emeraldinsight.com/journals.htm?issn=1463-578X&volume=32&issue=5&articleid=17115972&show=abstract http://www.emeraldinsight.com/10.1108/JPIF-04-2014-0025 <strong>Abstract</strong><br /><br /><B>Purpose</B> – The purpose of this paper is to investigate property investment decision making by Australian REITs. <B>Design/methodology/approach</B> – Through an extensive literature review, a normative model of the property investment decision-making process is proposed. Based on semi-structured interviews with senior Australian REIT decision makers, a descriptive model of the property investment decision-making process by Australian REITs is developed. The normative model and descriptive model are compared and a prescriptive model of the Australian REIT property investment decision-making process proposed. <B>Findings</B> – With the four stage, 20-step process proposed in the normative model found to be generally supported by the descriptive model developed, this may potentially comprise an effective prescriptive model for the Australian REIT property investment decision-making process. <B>Research limitations/implications</B> – Further research is required to investigate if the prescriptive model is generalisable across other property investment decision-making groups or over time and whether it may lead to “good” decisions. <B>Practical implications</B> – The prescriptive model proposed may contribute consistency and transparency to the decision-making process, if adopted by Australian REITs, potentially leading to better decisions. <B>Social implications</B> – Greater consistency and transparency in property investment decision making by Australian REITs may lead to the optimal allocation of capital and greater investor confidence in the sector. <B>Originality/value</B> – The findings comprise the first prescriptive model of the Australian REIT property investment decision-making process, forming a basis for comparative investigation of that process adopted by other property investment decision-making groups. Article literatinetwork@emeraldinsight.com (David Parker) Tue, 29 Jul 2014 00:00:00 +0100 Green office construction: a discounted after-tax cash flow analysis http://www.emeraldinsight.com/journals.htm?issn=1463-578X&volume=32&issue=5&articleid=17115973&show=abstract http://www.emeraldinsight.com/10.1108/JPIF-01-2014-0007 <strong>Abstract</strong><br /><br /><B>Purpose</B> – The purpose of this paper is to address the apparent slow acceptance on the part of developers located in the USA to seek green certifications. If green-certified construction costs more than non-green construction, then is there a financial reason for not seeking a green rating. Do green buildings perform better than non-green buildings financially? The paper develops and presents a discounted present value model for doing a cost-benefit analysis for building green. This model enables an investor to determine the feasibility of constructing a new green-certified building instead of a conventional non-green building. Non-green buildings are not certified by a rating agency such as Leadership in Energy and Environmental Design (LEED), Energy Star or Building Research Establishment Environmental Assessment Method (BREEAM). Real estate permits are granted by local municipalities in the USA. This means that local government mandates requiring green construction that significantly adds to the initial cost of a project could have the unintended result of encouraging new non-green construction just outside their municipal boundaries. <B>Design/methodology/approach</B> – The paper collects publically available research data for office buildings located in the USA, and inputs this information into an income statement. It tests the hypothesis: is green-certified construction a financially feasible choice for an investor? An incremental approach using a 15-year holding period is presented. This time period takes into account equipment wear and tear. Heating/cooling systems and other green-technologically based operating systems have a limited life and do not last for 30 or 40 years. They are likely to need replacement after 15 years have lapsed. <B>Findings</B> – The negative net present value (NPV) results and high payback periods indicate that increased rents for green construction, a tax credit for the present value loss and/or property-tax reduction covering the shortfall is needed as an incentive to commercially build green. The implication of a negative NPV is that green office buildings will be built by government agencies where green is mandated, corporations that want a green image and benefit from this image, where local ordinances mandate green construction features and where local and federal tax incentives are available increasing a construction project's feasibility. <B>Research limitations/implications</B> – The limitation of any cost-benefit study is that analytical models and/or data used to forecast energy and water consumption savings in green-certified buildings compared to conventional buildings can be inaccurate. Forecasting models can understate or overstate the actual savings realized from green construction especially in the long-term given the difficulty of predicting equipment wear and tear, net rents and energy costs. The modeled percentage cost associated with green new construction features could remain constant or grow through time. Tables I and II results assume energy and water expenses remain a constant percentage over the 15-year period. The agency costs associated with obtaining a LEED or BREEAM certification was not calculated as an upfront cost. Certification by LEED or BREEAM increases the upfront cost associated with building a green building. <B>Practical implications</B> – The length of the payback period estimates coupled with negative NPV for green certified compared to non-green construction suggests that developers do not have an incentive to build green. Higher WACC rates would result in green-certified projects being less feasible to build. <B>Social implications</B> – The LEED certification point system may need to be reviewed. Points are assigned for features that improve occupant satisfaction, but may have little impact on reducing energy usage. <B>Originality/value</B> – A model is presented for determining whether green-certified construction is financially feasible. The model enables the investor to determine the size of a tax incentive that is needed to enable new green construction to be economically feasible to build. The higher the negative NPV the larger the income or property tax incentive or other financial incentives needed. Prior research studies compared green and non-green buildings, but did not compare the energy savings generated to the additional construction and upfront costs incurred using a discount rate. They assumed the energy savings justified the additional initial cost associated with building a new green certified. Article literatinetwork@emeraldinsight.com (Billie Ann Brotman) Tue, 29 Jul 2014 00:00:00 +0100 An examination of the structure and dynamics of Singapore's maturing Central Area office market http://www.emeraldinsight.com/journals.htm?issn=1463-578X&volume=32&issue=5&articleid=17115974&show=abstract http://www.emeraldinsight.com/10.1108/JPIF-02-2014-0013 <strong>Abstract</strong><br /><br /><B>Purpose</B> – The purpose of this paper is to examine the structure and dynamics of Singapore's Central Area office market. A long-run equilibrium relationship is tested and a short-run adjustment error correction model are estimated, incorporating appropriate serial error correction. The long-run equation is estimated for office rent, with office employment and available stock. <B>Design/methodology/approach</B> – With the vector error correction model (VECM), the lagged rent, available stock, office employment, vacancy and occupied stock (OS) can impact the rental adjustment process. Equilibrium rent on the whole reacts positively to lagged rents, available stock, office employment, OS and negatively to vacancy rates (VC). Past levels of positive change in VC and rental growth can have negative effects on current OS. <B>Findings</B> – While good economic conditions signaled by increases in rents increase the supply of new stock (available space), higher rents and VC dampen the long-term occupied space (space absorption) in accordance with economic theory. Available stock can be forecasted by past rent and absorption levels owing to the developer's profit-driven nature. <B>Research limitations/implications</B> – An understanding of the interaction between the macroeconomic variables and the Central Area office market is useful to domestic and foreign investors and developers, who then can better evaluate their decision making in commercial real estate investment and development projects. <B>Practical implications</B> – It is implicit that the Singapore Central Area office market requires at least a year before any rental increase can potentially dampen the space demanded. Firms are attracted to locate there owing to agglomeration economies and they are willing to pay premium office rents in conjunction with office space intensification in the Central Area. Newly built space is positively affected by past rents. Urban Redevelopment Authority and private real estate developers should be wary of excess office sector vacancies by avoiding over supply, even though an increase in the supply of office space in the Central Area can have a positive impact on office rent in the longer term. Most of the office space development would tend to meet the demand in the long run. Rental stickiness is exemplified as rental changes are affected by lagged rent. <B>Social implications</B> – Policy makers are better enabled to stabilize the office sectors of the real estate market if so required. <B>Originality/value</B> – The paper adopts the VECM and validated by empirical evidence, to investigate the long-run equilibrium relationship and short-term corrections underlying the dynamics of the Singapore Central office market. Delay in the restoration of equilibrium in real estate markets is attributed to factors like lease terms and supply lags. Article literatinetwork@emeraldinsight.com (Kim Hin David Ho, Satyanarain Rengarajan, John Glascock) Tue, 29 Jul 2014 00:00:00 +0100 Fracking for shale gas in the UK: property and investment issues http://www.emeraldinsight.com/journals.htm?issn=1463-578X&volume=32&issue=5&articleid=17115975&show=abstract http://www.emeraldinsight.com/10.1108/JPIF-04-2014-0022 <strong>Abstract</strong><br /><br /><B>Purpose</B> – Large-scale shale gas reserves have recently been identified under many parts of the UK. Development pressure for detailed exploration and possibly the exploitation of these reserves by hydraulic fracturing, popularly described as fracking is growing rapidly and seems to have UK Government support. With this in mind the purpose of this paper is to offer a general review of the possible development of shale gas reserves by fracking within the UK and to explore a number of the property and investment issues associated with such development. <B>Design/methodology/approach</B> – The briefing note begins with an outline of the characteristics of shale oil and the fracking process and of the initial developments within the UK and discusses some of the property and investment issues associated with such developments. The note is based upon information drawn from the internet sources, principally national and local governments, property, financial and environmental organisations and on visits to a small number of sites of exploratory fracking. <B>Findings</B> – The paper identifies a wide range of potential environmental impacts associated with the development of shale gas reserves by fracking and reveals growing awareness in the UK that such development could have a major impact on property values, on the availability of mortgages and on property insurance. At the same time the paper also suggests that financial institutions are increasingly taking steps to minimise risks to their investments and reputation from potential environmental impacts. <B>Practical implications</B> – The paper suggests a number of issues property managers and consultants will need to address in monitoring the impact of shale gas development by fracking on property values and it offers some guidelines to investment managers. <B>Originality/value</B> – This paper provides an accessible review of the development of shale gas resources by fracking within the UK and as such it will be of value to a range of property and investment management professionals and to students pursuing property and investment courses. Article literatinetwork@emeraldinsight.com (Peter Jones, Daphne Comfort, David Hillier) Tue, 29 Jul 2014 00:00:00 +0100 Compulsory purchase http://www.emeraldinsight.com/journals.htm?issn=1463-578X&volume=32&issue=5&articleid=17115976&show=abstract http://www.emeraldinsight.com/10.1108/JPIF-05-2014-0035 <strong>Abstract</strong><br /><br /><B>Purpose</B> – The purpose of this paper is to review the economic theories that lie behind the assessment of compulsory purchase compensation and the issues that arise from them. <B>Design/methodology/approach</B> – The method has been to review the literature about the theories and the critiques of them and to examine the extent to which they provide guidance in specific cases. <B>Findings</B> – The Hicks-Kaldor compensation test was developed as a way around certain problems in welfare economics but attempts to use it to determine whether projects involving compulsory purchase increase welfare are subject to a number of problems. Ultimately, there are issues of equity as well as efficiency so that a test that just looks at efficiency issues is problematic. <B>Practical implications</B> – Understanding the weaknesses in the theoretical models behind compulsory purchase compensation can help policy makers devise alternative approaches in situations in which land has to be assembled for regeneration or infrastructure projects and fairer systems of compensation. <B>Originality/value</B> – The use of the Hicks-Kaldor test has been challenged in environmental economics but the validity of these criticisms for compulsory purchase has not been recognised to the same extent. The use of some original case studies helps to identify some of the issues and alternatives. Article literatinetwork@emeraldinsight.com (Richard Grover) Tue, 29 Jul 2014 00:00:00 +0100 Rent review 2014 http://www.emeraldinsight.com/journals.htm?issn=1463-578X&volume=32&issue=5&articleid=17115977&show=abstract http://www.emeraldinsight.com/10.1108/JPIF-05-2014-0034 <strong>Abstract</strong><br /><br /><B>Purpose</B> – The purpose of this legal update is to examine the recent case law relating to rent review in England and Wales. The paper argues that as rent terms have reduced in length, and as market conditions have tended to produce nil-uplifts, there have been relatively few review cases before the court. Cases that reach court tend to fall into two broad categories: contractual interpretation and challenges to third-party determination. <B>Design/methodology/approach</B> – Review and analysis of case law in England and Wales. <B>Findings</B> – There are no special rules for interpreting rent review clauses. The court's approach to contractual interpretation follows House of Lords and Supreme Court rulings culminating in <IT>Rainy Sky SA v Kookmin Bank</IT> (2011). There are also very limited circumstances in which the court will set aside an arbitrator's award, informed by a policy that favours upholding arbitration awards as a quick and cost-effective way to settle rent review disputes. <B>Practical implications</B> – Rent review clauses must be interpreted in accordance with the normal rules of contractual interpretation. The court is unlikely to be swayed by submissions asserting the “general purpose” of rent review. <B>Originality/value</B> – This is an original analysis of case law. Article literatinetwork@emeraldinsight.com (Malcolm Dowden) Tue, 29 Jul 2014 00:00:00 +0100 Global Property Investment: Strategies, Structures, Decisions http://www.emeraldinsight.com/journals.htm?issn=1463-578X&volume=32&issue=5&articleid=17115971&show=abstract Book Review literatinetwork@emeraldinsight.com (Nick French) Tue, 29 Jul 2014 00:00:00 +0100 Editorial http://www.emeraldinsight.com/journals.htm?issn=1463-578X&volume=32&issue=5&articleid=17115978&show=abstract Editorial literatinetwork@emeraldinsight.com (Laura Gabrielli) Tue, 29 Jul 2014 00:00:00 +0100