Towers of Capital – Office Markets and International Financial Services

Citation

Ye, X. (2010), "Towers of Capital – Office Markets and International Financial Services", Journal of Property Investment & Finance, Vol. 28 No. 1, pp. 67-68. https://doi.org/10.1108/14635781011020047

Property is one of the pillar industries in a nation's economy, and it also plays an important role in a country's financial system. In the UK, the total value of commercial, industrial and other buildings in 2006 was approximately £740.8 billion, which accounted for 12 percent of fixed tangible assets on the national balance sheet (RICS, 2008). In line with the current globalization process, the property market has also been expanded worldwide. RREEF (2007) reports that the total value of the global investment market was approximately US$9.8 trillion in 2006, which is expected to rise to US$13.7 trillion in 2011. Institutional investors, i.e. insurance companies, pension funds, investment trusts, and unit trusts, are the main players in the property investment market.

Because of the massiveness and importance of the property market, it becomes even more necessary to understand the market structure and mechanism from investors', planners' and even policy makers' perspectives. To fulfil this need, especially under the current economic condition, Lizieri (2009) conducts a holistic analysis of the property market, with a focus on the office sector. There are three parts in this book, and each part contains three chapters:

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  Part I – Systems of Cities and Cities of Finance examines the process of cities that developed from their national locations to world cities, as well as their contributions to the global financial system.

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  Part II – Inside the Office Market focuses on the mechanisms of the office market in those international financial centres. It discusses issues such as demand, supply and rental values of prime office spaces in these cities.

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  Part III – International Finance, Global Office Markets and Systemic Risk studies the links between financial markets and property markets, and how this link reflects the office sectors among those international financial centres.

It would be properly fair to say that the basic contents of each chapter of the book are nothing new or unfamiliar to property professionals. However Lizieri blends those subject‐matters in such a new and unique way. He successfully combines urban social science approaches with urban economics by discussing the transformation of world cities, and the linkage between their office markets and the global financial markets.

More specifically, the property market is a combination of the user, investment and development markets. These three markets are interlocked with one another (Keogh, 1994). Financial services, such as banks and insurances, are the main users of office space, and, in the meantime, they acquire offices as an investment asset. Based on this framework, and without using sophisticated econometric or statistical models, Lizieri, “explores the relationship between the evolutions of major international financial centres as part of the global capital market system, the development of office markets in those cities, real estate investment in those office markets and the patterns of risk and return that result from the interactions between financial flows and office markets”(p. xi).

To summarize, this is a book that will provide further insights into and understandings of office markets in prime locations/world cities. This is a book that will benefit to professionals in both the property and the finance industries.