Development and Developers: Perspectives on Property

Citation

Ooi, J.T.L. (2003), "Development and Developers: Perspectives on Property", Journal of Property Investment & Finance, Vol. 21 No. 3, pp. 296-299. https://doi.org/10.1108/jpif.2003.21.3.296.1

This book brings together 14 contributions from leading academics and respected practitioners in the UK. As listed in the preface, the purpose for the book is first, to demonstrate the heterogenous nature of research on development and developers. Second, to highlight the inter‐relationships between particular methodological standpoints and the way in which they illuminate particular facets of the property business. Third, to argue for a more inclusive, interdisciplinary approach to property research which connects to wider debates within urban studies.

The book, comprising more than 300 pages, is divided into 15 chapters – each addressing specific areas of property development. The organization of the book is structured as follows: in the first chapter, the editors highlight the difficulty in defining the built environment, which is abstract and inevitably colored by the perspectives, theories and methodologies adopted by the individual researcher. Chapters 2 and 3 introduce the institutional perspective to development. Chapters 4 and 5 provide insights into the techniques used by developers to help them make decisions in a dynamic market environment. Chapters 6 to 10 examine the interrelationships between agency and structure, whilst Chapters 11 to 14 link the perspectives and changing strategies of development actors to the shifting relations of property provision over space and time. In the concluding chapter, the editors make a final argument for a more inclusive, interdisciplinary approach to property research.

The topics covered in the book include:

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  The market context of property development activity.

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  Modeling the development sector of the property market.

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  Market research for office real estate.

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  The financial appraisal of development projects.

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  Developers’ decisions and property market behaviour.

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  The organization of property development professions and practices.

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  The impact of land management and development strategies on urban redevelopment prospects.

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  Developers in local property markets: assessing the implications of developer experiences and attitudes in the re‐use of vacant industrial buildings in an old industrial area.

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  Systems theory and the commercial development process – towards an understanding of complex behaviour and change.

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  Evolution in the supply of commercial real estate: the emergence of a new relationship between suppliers and occupiers of real estate.

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  Global players and the re‐shaping of local property markets: global pressures and local reactions.

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  Developing interests: environmental innovation and the social organization of the property business.

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  Property companies and the remaking of markets: stories from the 1990s.

It is obvious from the coverage that the editors had attempted to present a multi‐faceted view of property development and property developers. In particular, the contributions draw on the experience of academics and practitioners from the perspectives of economists, geographers, planners, sociologists and property analysts. Both quantitative and qualitative research methods are covered. Following are reviews of the individual papers in the book.

In Chapter 2, D’Arcy and Keogh present an interesting perspective of the property market from the lens of institutional economics. An institution is defined as a set of formal and informal rules governing the behaviour of diverse property market actors. These can be individuals, companies, governmental and other bodies. Hence, the institutional approach to development focuses on the range of actors involved in development, either as initiators or facilitators of development activity. Using the evolution of the UK office market over the last 50 years, the authors demonstrate that actual outcome in the market arises from the choices made by specific actors.

In Chapter 3, McGough and Tsolacos present the results of an empirical investigation of the factors influencing building output. They examine the relative performance of the accelerator model, the Koyck model and the profitability model to explain movements in new commercial construction. Results of the accelerator model lead them to conclude that the driving force behind building supply is the economy.

In Chapter 4, Barkham provides a structured framework to conducting market research for office real estate. It gives a comprehensive and practical insight into market research. It also highlights the potential biases involved in market research. In Chapter 5, Morley demonstrates how financial appraisal of development projects are undertaken in practice. He also shows how risk is assessed and suggests how appraisals can be refined and extended to provide more information and to confront the prospect of inevitable uncertainty.

In Chapter 6, Henneberry and Rowley examine the relationship between developers’ decisions and property market behaviour. Adopting a behaviouralist approach, they use financial modeling techniques to imitate behaviour – where developers are modeled to be more than price takers. This means that they could also engage in forecasting and/or trend extrapolation. In Chapter 7, Ball examines the organization of property development professions and practices. Using the information asymmetry argument, he shows that information problems are at the heart of the rationale for professionalism and professional institutions, both in terms of identifying skills (adverse selection) and minimizing the effects of professionals failing to conform to the aims of the client (moral hazard). His analysis concludes that professionalism is better at coping with adverse selection rather than moral hazard problems – whereas reputation of practices and larger firms are more likely to minimize moral hazard effects.

In Chapter 8, the study by Adams et al. focuses on owners of large redevelopment sites in four cities, namely Aberdeen, Nottingham, Dundee and Stoke‐on‐Trent to address the following questions. First, do most owners of vacant urban land or obsolete urban property encourage or impede its redevelopment? Second, does this vary between different types of owners? Third, how are the strategies, interests and actions of brownfield landowners related to the organization of economic and political activity and to the prevailing values that frame their individual decision making?. In Chapter 9, Ball provides further survey evidence on how 34 developers in the Stoke‐on‐Trent industrial property market influence the direction and development of the local property economy through the initiation of activity and the response to opportunities.

In Chapter 10, Trevillion conceptualizes the property market as a complex adaptive system that focuses on the systems dynamic in and through which development occurs and developers function. He then uses the office market in Edinburgh to illustrate the benefits of adopting a systems approach to the property market – to understand the way in which the market has operated, in particular the drivers for new commercial development.

In Chapter 11, Harris traces the evolution in the supply of commercial real estate and the emergence of a new relationship between the suppliers and occupiers of real estate. In the 1990s, as firms seek to down‐size and refocus on their core business, corporate real estate strategies focused on flexible occupation to allow the firms to respond to changes and uncertainty in their markets. Outsourcing became popular and corresponding to this, a number of developers began to venture into real estate services. This has led to radical restructuring in both the nature of the real estate product and in the organization and its production. In Chapter 12, Magalhaes presents two case studies that look at the strategies of UK property consultants in their expansion into Madrid and Milan and how those strategies affected and were affected by, the transformation of market structures and practices in each place.

In Chapter 13, Guy identifies the connections between environmental concern and commercial real estate practice. He explores how the competing ways of seeing the market of different development actors set limits to and offer opportunities for environmental innovation. In particular, the enthusiasm for environmental innovation is tempered by an awareness of the economic realities of the UK real estate market. And he suggests that this market realism explains why it is rare to find any environmental zeal amongst property developers, who unlike the architects, do not make money by the construction of buildings per se. Hence, from their perspectives, environmental issues have to be considered alongside wider business priorities.

In Chapter 14, Pryke and Du Gay focus on the ways in which key agents involved in the processes of commercial property development and investment markets in the UK reformed following the “crash” of the late 1980s. Essentially, they examine the interplay between the actors involved and how a variety of economic discourses remade the sector.

Overall, I have thoroughly enjoyed reading the book. It has provided me with an interdisciplinary view of property development and property developers. From a research angle, this book has definitely made a contribution to the research agenda. As a teacher of an undergraduate module on Real Estate Development, the series of papers provided me with a very useful framework for my lectures as well as valuable materials for tutorial discussions and readings. Although the papers are written in the UK context, I have no hesitation in recommending this book as one of the essential readings for my students.