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Property management markets in 2014
Article Type: Editorial From: Property Management, Volume 33, Issue 1
The start of another year sees the property management world continue to recover from the stresses and strains of the global financial crisis. At this time last year I reflected on the volatility in the property markets over the previous year. It seems that property managers are experiencing more of the same with continued moderate volatile growth. In their fourth quarter review for 2014, CBRE state that investor demand is growing in the low interest climate and they predict that rents will continue the steady growth until the end of the current cycle, which they forecast to be in 2018 (CBRE, 2014). While generally improving, the market is patchy, with markets where political and economic uncertainty remains still struggling to show any positive signs of growth. In their forecast for 2015-2016, Cushman and Wakefield highlight that in the US most cities are experiencing economic expansion, with the exception of those reliant on energy and technology sectors, and this is translating into demand for new and refurbished office space, particularly in the "A" Grade stock. Other stand out growth cities are Tokyo, Dublin and Jakarta, all of which are predicted to have above 8 per cent rental growth over the next year (Cushman and Wakefield, 2014). JLL report a similar pattern in the Asia Pacific region, with some moderate rental growth in those markets which have an undersupply of office space. Singapore and Auckland experienced 3.5 and 3.8 per cent rental growth in the second quarter of 2014, while Seoul and Shanghai experienced continued softening in demand and increasing supply (JLL, 2014).
Encouragingly the consensus among the major real estate agents is that 2015 will see most major markets continue to experience moderate rental growth fuelled by the low interest environment and a slow recovery in the USA and Europe. This means that global property portfolio managers will experience continued upward pressure on rentals at review and lease renewal, increasing the overall costs of occupation. The message from this seems to be that if there is an opportunity to lock in occupancy costs now, then it would be prudent to do so.
Now to look at this issue of Property Management in which we have the usual line up of high-quality property research from around the world. This issue has papers from Africa, Australia and UK. It is pleasing to see the increasing number of papers emanating from various regions of Africa and the improving quality of the research coming from this region.
The first paper in this issue comes from Nigeria and is written by Timothy Tunde Oladokun and Timothy Oluwafemi Ayodele from Obafemi Awolowo University in Nigeria. Their paper "Students' perception of the relevance of work experience scheme to real estate education in Nigeria", is as the title suggests, an evaluation of practical experience provided to real estate students in Nigeria. The findings indicate that practical experience forms an essential element in real estate education, enabling students to gain behavioural skills and other necessary experience before moving into private practice.
The second paper is a collaboration between researchers in Australia and Germany and is by Chris Heywood from Melbourne University, Eckhart Hertzsch from Fraunhofer Institute for Building Physics in Berlin and Mirek Piechowski from Energy Solutions and Sustainability in Australia. They present the paper "The climatic influence on sustainable refurbishments and life cycle investing in Australia". The paper reports on an investigation as to the effect of location on refurbishment strategies to reduce greenhouse gas emissions using the temperate and sub-tropical urban locations in Australia. This paper provides a basis for property investors to make decisions about sustainable investments when location is important.
Paper 3 in this issue is a second paper emanating from Africa. This paper reports on research findings from Bahir Dar University in Ethiopia, where the author, Achamyeleh Gashu Adam, provides the paper "Land readjustment as an alternative land development tool for peri-urban areas of Ethiopia". The paper looks at the issues of rapid urbanisation and the processes of land appropriation on the edge of major cities. It explores the issues of compulsory acquisition on peri-urban areas and the challenges faced in resuming land occupied by informal settlements. The paper proposes a new model for development in these peri-urban areas which does not require dispossessing or displacement of occupiers.
The fourth paper is written by Dubem Ikediashi and Onuwa Okwuashi from the University of Uyo, Nigeria, and is our second paper focused on professional practice there. The paper "Significant factors influencing outsourcing decision for facilities management (FM) services: a study on Nigeria's public hospitals", reports on the key factors which are associated with outsourcing of hospital facilities in developing countries. The research is based on a case study methodology in which 65 key attributes are assessed using a questionnaire circulated to FM practitioners in Nigerian health facilities. The paper provides a valuable evaluation of the health sector FM practices in Nigeria.
The final paper comes from a team led by Andrew Ellison from the University of West of England. Their paper is entitled "Problematic differentiation between property bonds and leases in healthcare provision: a Southern Cross case study". The paper investigates the estimated £15.2 billion per annum residential care and nursing home industry in the UK. The research provides an insight into institutional investment in healthcare provision and highlights how aspects of the industry are financially unsustainable. With 487,000 long-stay residential care places this research has significant implications for the investors, healthcare industry and those who use the care services. This paper has far-reaching implications as the need for these services will come to us all at some future date.
I trust that you find the range of research papers presented in this issue of Property Management interesting and informative and I would encourage you to present your research for inclusion in the journal in 2015. I would also welcome any feedback on the papers that are presented, or the future development of the journal to meet the needs of both researchers and practitioners.
Clive M.J. Warren
CBRE (2014), Market Review - Global Rent and Capital Value Indicies. CBRE Global Research and Consulting.
Cushman and Wakefield (2014), Global Office Forecast 2015-2016. Cushman Wakefield Research.
JLL (2014), Office Index, Third Quarter 2014. Asia Pacific. JLL Research.