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Article
Publication date: 1 December 1997

Aart C. Hordijk and James C. Condit

For ages, the diverse histories and cultures of European nations have challenged professionals and politicians who have attempted to refine international co‐operation and…

Abstract

For ages, the diverse histories and cultures of European nations have challenged professionals and politicians who have attempted to refine international co‐operation and trade. The turbulent history of the attempts to develop a single European market and European currency attests to that. Efforts to standardize appraisal practices have been no less challenging. Three groups have been prominent in this effort: Inter‐European appraiser organizations, professional organizations, and the real property investors. Experience with the ROZ/IPD Index (a comparative data analysis) indicates that the investors are forcing the creation of national and international appraisal standards in order to accomplish their investment goals and minimize risk.

Details

Journal of Property Valuation and Investment, vol. 15 no. 5
Type: Research Article
ISSN: 0960-2712

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Article
Publication date: 9 March 2010

Aart C. Hordijk, Dirk Rompelman and Leonie Koerhuis

The purpose of this paper is to give an overview of the sale‐and‐leaseback transactions in The Netherlands over the past ten years, and to compare the rents and yields in…

Abstract

Purpose

The purpose of this paper is to give an overview of the sale‐and‐leaseback transactions in The Netherlands over the past ten years, and to compare the rents and yields in those transactions with what is common on the market at that moment.

Design/methodology/approach

The method chosen is a straight mathematical calculation, the only possible way at this initial stage. A unique dataset provided by Vastgoedmarkt is used for this paper.

Findings

Of the sale‐and‐leaseback transactions, 60 percent are concluded against a higher rent than the market rent, and contract rent for the biggest areas is on average concluded at 17.4 percent above the market rent.

Research limitations/implications

Because of the incompleteness of the reporting of the transactions and the lack of transparency in this area, further analysis is necessary.

Practical implications

When entering into a sale‐and‐leaseback transaction, the seller and the buyer in particular should be much more aware of the circumstances on the market.

Originality/value

Prior papers on sale‐and‐leaseback generally do not consider rents and there are almost no recent papers. This paper does focus on rents and uses data from the past ten years.

Details

Journal of Corporate Real Estate, vol. 12 no. 1
Type: Research Article
ISSN: 1463-001X

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Article
Publication date: 8 February 2008

Aart Hordijk and Bert Teuben

The liquidity of direct real estate has been surrounded by mystery. Research in the USA and in the UK has contributed much to clarify the liquidity issue of direct real…

Abstract

Purpose

The liquidity of direct real estate has been surrounded by mystery. Research in the USA and in the UK has contributed much to clarify the liquidity issue of direct real estate. In The Netherlands, not much research exists on this issue; however, a major ALM advisory firm in The Netherlands suggests a liquidity factor of 1.5 times the standard deviation of the ROZ/IPD real estate index, leading to a 50 percent higher risk compared to the current ROZ/IPD real estate index risk. This paper aims to investigate this issue.

Design/methodology/approach

The paper investigates whether this is a reasonable assumption by approaching the issue from several perspectives. First, the transaction process, the effects of heterogeneity and the size of the property are reviewed. The market risk between the date of the decision to sell the property and the date on which it was actually sold is also reviewed. The last element reviewed is the reallocation risk, in other words missed opportunities that have arisen because it could take longer to sell property than to sell stocks or bonds. Extensive anonymous information from the main institutional investors in The Netherlands is used, as well as interviews with the main brokers in The Netherlands. The survey is placed in an international context by comparing the results as well as the methods to previous surveys in the UK.

Findings

As a result suggestions are presented about risk premiums as a protection against the liquidity risks which turn out to be quite low, much lower than the 50 percent increase of the risk premium on top of the ROZ/IPD real estate index's standard deviation of the total return. The results are compared to risk premiums for stocks and bonds at times of high and average returns.

Original/value

So far not many surveys have been done on this subject using the bottom up approach. If there were, those have been looked at in the literature review. The unique ROZ/IPD databank allows us to come up with real quantitative results related to the different types of real estate liquidity risks. The paper has identified five of those. The survey is restricted to results in a growing market because of the time frame and it is strongly recommended to repeat it after a depressed market.

Details

Journal of Property Investment & Finance, vol. 26 no. 1
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 12 July 2011

Aart Hordijk, Paul Nelisse and Leonie Koerhuis‐Gritter

Real estate investors invest more and more cross‐border, but the valuation practices in the different countries are not similar. For investors it is good to know the…

Abstract

Purpose

Real estate investors invest more and more cross‐border, but the valuation practices in the different countries are not similar. For investors it is good to know the difference in valuations between the countries, therefore this paper aims to investigate the valuation practices in eight different countries (France, Germany, Italy, The Netherlands, Portugal, Russia, Spain and the UK).

Design/methodology/approach

To gather the information a questionnaire was sent out. The questionnaire included questions not only about facts, but also about the respondents' opinion about the reliability of the information.

Findings

It was found that in the different countries market value is not always the basis and that a wide variation of surface measurements is currently applied. Regular lease periods and the responsibility for operating cost vary from country to country. Also the sources for market evidence and their reliability differ per country. So it can be seen that, although market values can be compared across countries, valuation methodologies are country‐specific.

Research limitations/implications

The authors are still in the process of retrieving information and quality control, and the intention is to expand the research to all European Union countries, and finally all European countries. Therefore this paper only shows initial findings.

Originality/value

The existing research about international valuation practices is not very recent, and, because the authors not only assembled facts and processes, but also collected the respondents' opinions about the reliability of the information, the research is very valuable.

Details

Journal of Property Investment & Finance, vol. 29 no. 4/5
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 1 April 2005

Aart Hordijk and Wouter van de Ridder

This research paper has two objectives. The first is to shed light on the consistency in and quality of the applied valuation models. The second objective is to analyse…

Abstract

Purpose of the paper

This research paper has two objectives. The first is to shed light on the consistency in and quality of the applied valuation models. The second objective is to analyse uniformity on important valuation input variables throughout 1994‐2002.

Design/methodology/approach

More than 150 original valuation reports are retrieved and qualitatively checked on model consistency, for example on discounting methods. The impact of the inconsistencies on the end value were calculated by using a dummy discounted cash flow model (DCF). The uniformity of the input variables net yield, discount rate and exit yield are quantitatively determined: is there a decreasing standard deviation through time?

Findings

There appears to be little consistency: the Dutch appraisers use a variety of methods within the DCF method. Cash flows are discounted quarterly in advance, yearly in arrear and averaged over the year, only three of the ten most frequent used appraisers use a flexible inflation scenario, etc. These different approaches can have a large impact on the appraisal value. As for the uniformity, the standard deviation for all three variables has not decreased through time.

Practical implications

The conclusions and recommendations of this research have been used by the valuation committee of the ROZ/IPD Netherlands Property Index to improve and extend the valuation guidelines.

Originality/value

Valuation models, which are the foundation of benchmarks, have never been researched on a large scale due to confidential issues. This research appears to be the first to actually analyse valuation models of many different appraisal companies in one country, The Netherlands. The participants of the ROZ/IPD Netherlands Property Index own 85 per cent of the €38 billion institutionally invested value in real estate in The Netherlands. Their policy decisions are partially based on the comparison to the Dutch benchmark. Therefore consistency and uniformity of the valuation models is critical.

Details

Journal of Property Investment & Finance, vol. 23 no. 2
Type: Research Article
ISSN: 1463-578X

Keywords

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