Editorial

Citation

(1999), "Editorial", Journal of Property Investment & Finance, Vol. 17 No. 4. https://doi.org/10.1108/jpif.1999.11217daa.001

Editorial

About the Guest EditorPaul Gallimore is a Fellow of the Royal Institution of Chartered Surveyors (RICS) and holds a Masters degree and a PhD. He is Professor and Head of the Department of Surveying at Nottingham Trent University, one of the country's leading centres for property education. Prior to entering higher education, he gained experience as a valuer and property manager in both the public and private sectors. He has played an active part in the affairs of the RICS and is currently a member of its Property Investment, Development and Use Research committee. His principal research interest is in behavioural property and real estate analysis, including investigating international differences between property valuers and real estate appraisers. His publications have appeared in leading journals in both the UK and USA.

For the second time within two years, this journal has devoted a special edition to the subject of behavioural real estate. It may also be the last time. As research in this area expands and develops, the case advances for its acceptance as a valid framework for property market analysis and correspondingly it becomes less of special and more of general appeal. Part of this advance involves transmitting the gathering momentum of interest beyond the academic community to the property profession and into the industry it serves. There are distinct signs that this is happening. In this respect, behavioural real estate analysis may follow the route already taken by behavioural finance. In the past ten years or so, practising finance professionals have increasingly come round to the view that finance market models should realistically reflect investor behaviour. This has occurred most obviously in the USA, where some investment management firms now offer behaviourally-oriented investment advice and advocate "contrarian" investment strategies that exploit the psychological "irrationalities" of market participants.

In predicting the future path of behavioural real estate research, some care must be exercised in drawing analogies between financial and real estate markets. There are differing shades of opinion as to how closely property resembles other assets in the capital markets. These markets, however, supply a rich stream of data, which has been used by behavioural finance to detect and explain events that are anomalous to normative finance theory. Data in this volume are simply not available in direct investment property markets and so we have a less clear picture of what is actually happening. Advancing behavioural interpretations of property investment may therefore not be quite such an easy task as in the wider financial markets, although it is no less valid an objective for this.

Another difference between the capital and real estate markets is in the existence of valuers. In markets with continuous and transparent trading, the valuation function is superfluous. It is clearly not superfluous in the property market. Much of behavioural real estate research to date has focused on portraying the reality in valuer behaviour as compared to the theoretical ideal. This work has produced important findings that suggest there is much still to learn. For example, do we really understand the reciprocity that exists between the influence of clients on valuation advice and the impact of that advice on transactions and prices?

Drawn from worldwide, the papers in this volume amply illustrate the issues that surround attempts to import the human dimension into our market models. There are papers that explore questions of scope, direction and methodology. There are papers that exemplify the challenges that confront empirical investigations of human interaction and decision making. Taken together with the papers in the first special issue and the work that is emerging in journals elsewhere in the world, they contribute to crystallising the future agenda for behavioural real estate analysis.

Paul GallimoreNottingham Trent University