Editorial

Citation

Warren, C.M.J. (2014), "Editorial", Property Management, Vol. 32 No. 1. https://doi.org/10.1108/PM-10-2013-0052

Editorial

Article Type: Editorial From: Property Management, Volume 32, Issue 1.

As we commence another volume of Property Management journal, once again it is time to reflect on how the global property management market and wider economy has fared over the past year. This time last year I wrote that the world economy continued to recover from the financial crisis and that volatility in property values and rental levels meant a greater focus was being placed on the management of property assets. The past year seems to have continued the recovery, with reports of greater stability in the markets and many major cities seeing stability and growth.

There still remains a level of uncertainty in global markets, however, with the USA continuing their programme of quantitative easing, but, with the predicted scaling back of the programme, some analysts are already talking of rising interest rates. 2014 will probably see this change in monetary policy coming through and, hopefully, property markets will continue the growth that has been seen in 2013.

In their 2013/2014 report, Winning in Growth Cities, Cushman and Wakefield (2013) indicate that investment pressures are returning to the market, with volumes up 16.7 per cent, driven by the largest cities which approached a 21 per cent rise. New York had a 39 per cent increase in volume of traded property, while London recorded the second largest volume, but only with a 6 per cent increase. This high level of demand is forecast to continue into 2014, further stimulating the market. This stimulus is echoed in Savills’ European Office Report (Savills, 2013) which shows rental growth continuing to rise in London, Dublin and Frankfurt among other major European cities. Many other areas, however, are declining with an overall −1 per cent rental growth recorded. The overall vacancy rate continued to fall in Europe to around 10 per cent in the middle of the year, although there is considerable variability throughout the region. In Asia the market continues to grow, despite the amount of foreign investment into the region slowing considerably over the past year. Rental growth has been a feature of the market in most major centres, with 9.4 per cent growth recorded for Sydney. There is, however, rental contraction being seen in Beijing and Shanghai, with −3.5 and −2.4 per cent, respectively.

What this all means for property managers is that, while some markets are still exhibiting volatility, others are beginning to stabilise, with the outlook towards decreasing vacancy, rising rental levels and contracting yields. These changes in the market fundamentals, together with increasing business confidence, will see greater demand for office space across the major cities. Prudent property managers will be carefully monitoring the market with tenants beginning to seek to lock in favourable rental deals before decreasing vacancy leads to rental escalation and a steady move away from the tenant led market that we have seen over recent years.

This issue of Property Management reflects the changing economic conditions in which property managers are working, with papers analysing property funding issues in two regions of Asia. There are research papers from institutions across the world, including Europe, Asia and the West Indies, with a mix of commercial and residential property management issues addressed, there is also some insight into the education of the next generation of property management professionals.

The first paper in this issue is a collaboration between researchers in New Zealand, China and Sweden and is titled, “An explanation of capital structure of China's listed property firms”. It is an analysis of how firms in China cope with the unique financial conditions and the role the State plays in influencing the market. It is a paper of considerable interest to any property managers with investment property or corporate real estate assets within China as it demonstrates positive outcomes that State owned shares have in property companies.

Our second paper is by Paul Taylor at the University of the West Indies. The paper; “Management challenges and responses: experiences of property managers operating in the small open economy of Jamaica”, provides a fascinating insight into the property industry in the West Indies and is probably the first such paper from this region. The case study approach taken in this research highlights the challenges that developing countries face. These are not necessarily unique to the one region, however, and lessons can be learned and applied in many developing regions of the world.

Paper three comes from Aalto University in Finland and is the work of Jylha Tuuli and Junnila Seppo. This paper is a little different in that it explores the impact of lean thinking on value creation in the property sector. The paper uses a case study approach within four organisations to identify the key factors which contribute to waste and poor value creation in the property procurement process. This paper has significant implications for property managers in terms of their input to the design and development of new property assets and the impact that waste control and life cycle approaches, through lean thinking, can have on the longer term performance of an asset.

The fourth paper bears some relation to the previous paper in that it seeks to analyse the commercial awareness of students in property courses which could, perhaps, lead to a reduction in the waste identified in the previous paper. Joanna Poon at Deakin University in Australia has analysed commercial awareness in real estate courses offered in British universities. The paper concludes that commercial awareness, while having always been a component of most property related courses, is increasingly important and that economic and strategic management skills should be embedded within all RICS accredited courses.

The final paper in this issue comes from the Asian Institute of Technology, Thailand. The paper “Private partner's risk response in PPP low-cost housing project” explores the risks faced by private sector developers undertaking housing projects for the Thai Government. Thailand, like many developing countries, faces a severe housing shortage and to address this, the Government is encouraging private participation in the delivery of State housing projects. The findings of this research highlight the risks associated with political unrest and economic turmoil, which present considerable risks to the private sector in developing countries. With effective risk mitigation strategies employed, however, the PPP process is enabled to function adequately to the advantage of both partners in the project.

I hope that you enjoy this issue of Property Management and find the research presentations stimulating. May I take this opportunity to wish you all a healthy and prosperous 2014.

Clive M.J. Warren

References

Cushman and Wakefield (2013), Winning in Growth Cities, Cushman & Wakefield, London
Savills (2013), Market Report European Offices August 2013, Savills Research, London

Further reading

CBRE (2013), “The opportunity and risk in CRE”, CBRE Global ViewPoint, October