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Article
Publication date: 25 July 2018

David Higgins and Treshani Perera

Whilst existing literature on real estate risk management focusses almost exclusively on holistic risk management techniques, documented increases in frequency and…

Abstract

Purpose

Whilst existing literature on real estate risk management focusses almost exclusively on holistic risk management techniques, documented increases in frequency and magnitude of unforeseen, rare and extreme events can throw up sudden, unexpected shocks that can challenge recognised real estate decision-making strategies. The paper aims to discuss this issue.

Design/methodology/approach

To advance real estate decision-making practice in this area, this research paper takes the skilfully conceptualised downside risk framework presented by Diebold et al. (2010), being the known (K), the unknown (u) and the unknowable (U) risk categories, to provide a blueprint for effective real estate decision making in a changing global environment.

Findings

In recording categories of risk, managing uncertainty can be achieved by an interrelated approach of adaption, robustness and resilience. This is important part of a real estate manager’s decision-making toolkit as risk recognition and knowledge of KuU event categories can augment an effective management strategy.

Originality/value

The mastery of modern real estate risk management can be better served by understanding and managing extreme downside risk events. Creating a comprehensive risk management framework can enhance comparative real estate performance whereby unprepared competitors fail in a world increasingly affected by large, highly improbable and unpredictable events.

Details

International Journal of Building Pathology and Adaptation, vol. 36 no. 4
Type: Research Article
ISSN: 2398-4708

Keywords

Article
Publication date: 4 March 2022

Bismark Aha, David Higgins and Timothy Lee

The paper considers if house price movements in the United Kingdom (UK) can be linked to the political cycle as governments realise homeowners represent a large portion of…

Abstract

Purpose

The paper considers if house price movements in the United Kingdom (UK) can be linked to the political cycle as governments realise homeowners represent a large portion of the voter base and their voting decisions could be influenced by the magnitude and direction of house price changes. Specifically, this paper aims to investigate whether house prices behave differently before and after elections and under different political regimes.

Design/methodology/approach

The paper analyses quarterly house price data from 1960 to 2018 together with data on UK parliamentary elections for the same period. Descriptive statistics and significance tests are used to analyse the impact of the political cycle on house price movements in the UK.

Findings

While there is no evidence that house prices in the UK performed significantly differently under different political parties, the authors observed that house prices performed much better in the last year before an election compared to the first year after an election. On average, house prices increased by 5.3% per annum in the last year before an election compared to 1.3% per annum in the first year following an election.

Research limitations/implications

The study highlights significant variations in the performance of UK house prices around election times.

Practical implications

It is imperative that the political cycle is given adequate consideration when making residential property investment decisions.

Social implications

House buyers and investors in the residential property market could include the election timings as part of their decision-making process.

Originality/value

This paper represents a unique systematic examination of the influence of the political cycle on residential houses prices in the UK.

Details

International Journal of Housing Markets and Analysis, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 3 April 2018

Treshani Perera, David Higgins and Woon-Weng Wong

Property market models have the overriding aim of predicting reasonable estimates of key dependent variables (demand, supply, rent, yield, vacancy and net absorption…

Abstract

Purpose

Property market models have the overriding aim of predicting reasonable estimates of key dependent variables (demand, supply, rent, yield, vacancy and net absorption rate). These can be based on independent drivers of core property and economic activities. Accurate predictions can only be conducted when ample quantitative data are available with fewer uncertainties. However, a broad-fronted social, technical and ecological evolution can throw up sudden, unexpected shocks that result in the econometric outputs sceptical to unknown risk factors. Therefore, the purpose of this paper is to evaluate Australian office market forecast accuracy and to determine whether the forecasts capture extreme downside risk events.

Design/methodology/approach

This study follows a quantitative research approach, using secondary data analysis to test the accuracy of economists’ forecasts. The forecast accuracy evaluation encompasses the measurement of economic and property forecasts under the following phases: testing for the forecast accuracy; analysing outliers of forecast errors; and testing of causal relationships. Forecast accuracy measurement incorporates scale independent metrics that include Theil’s U values (U1 and U2) and mean absolute scaled error. Inter-quartile range rule is used for the outlier analysis. To find the causal relationships among variables, the time series regression methodology is utilised, including multiple regression analysis and Granger causality developed under the vector auto regression (VAR).

Findings

The credibility of economic and property forecasts was questionable around the period of the Global Financial Crisis (GFC); a significant man-made Black Swan event. The forecast accuracy measurement highlighted rental movement and net absorption forecast errors as the critical inaccurate predictions. These key property variables are explained by historic information and independent economic variables. However, these do not explain the changes when error time series of the variables were concerned. According to VAR estimates, all property variables have a significant causality derived from the lagged values of Australian S&P/ASX 200 (ASX) forecast errors. Therefore, lagged ASX forecast errors could be used as a warning signal to adjust property forecasts.

Research limitations/implications

Secondary data were obtained from the premier Australian property markets: Canberra, Sydney, Brisbane, Adelaide, Melbourne and Perth. A limited ten-year timeframe (2001-2011) was used in the ex-post analysis for the comparison of economic and property variables. Forecasts ceased from 2011, due to the discontinuity of the Australian Financial Review quarterly survey of economists; the main source of economic forecast data.

Practical implications

The research strongly recommended naïve forecasts for the property variables, as an input determinant in each office market forecast equation. Further, lagged forecast errors in the ASX could be used as a warning signal for the successive property forecast errors. Hence, data adjustments can be made to ensure the accuracy of the Australian office market forecasts.

Originality/value

The paper highlights the critical inaccuracy of the Australian office market forecasts around the GFC. In an environment of increasing incidence of unknown events, these types of risk events should not be dismissed as statistical outliers in real estate modelling. As a proactive strategy to improve office market forecasts, lagged ASX forecast errors could be used as a warning signal. This causality was mirrored in rental movements and total vacancy forecast errors. The close interdependency between rents and vacancy rates in the forecasting process and the volatility in rental cash flows reflects on direct property investment and subsequently on the ASX, is therefore justified.

Details

Journal of Property Investment & Finance, vol. 36 no. 3
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 20 November 2017

Peng Yew Wong, David Higgins and Ron Wakefield

This research aims to focus on the emerging determinants for the Australian residential property market subsequent to the Global Financial Crisis 2008.

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Abstract

Purpose

This research aims to focus on the emerging determinants for the Australian residential property market subsequent to the Global Financial Crisis 2008.

Design/methodology/approach

Quantitative models built on secondary data were tested on three residential property markets comprising metropolitan Melbourne and two key suburbs in the state of Victoria. The relationship between the house price performances and various leading Australian economic indicators was assessed.

Findings

As a result of the increasing relevance of Asia Pacific private wealth in the Australian residential property market, non-traditional determinants such as residential tourism have emerged as significant in the Melbourne residential property market.

Research limitations/implications

The result of this study can provide a better understanding on the relationship between the Australian residential property market and both the existing and emerging leading economic indicators.

Originality/value

A better understanding of foreign investment activities will assist policymakers to effectively manage inflated Australian residential property market without compromising the steady flow of foreign real estate investment.

Details

International Journal of Housing Markets and Analysis, vol. 10 no. 5
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 23 June 2020

David Higgins, Tsvetomira Vincent and Peter Wood

Multi-let industrial (MLI) estates are an emerging £15 billion UK real estate asset class that can offer attractive returns, a diversified income base, constrained supply…

Abstract

Purpose

Multi-let industrial (MLI) estates are an emerging £15 billion UK real estate asset class that can offer attractive returns, a diversified income base, constrained supply and extensive management opportunities to add value within an operational platform. This investment appeal is supported by the evolving MLI occupier market with the growth of small to medium enterprises (SME) requiring modern urban business space driven in part by technology advances offering new streams of supply chain connectivity between businesses and potential clients at a local level.

Design/methodology/approach

To understand more about MLI properties, this study utilises a hedonic pricing model to quantify property values as a function of defined variables. The dataset used for this research is a sample portfolio of 26 multi-let industrial properties. The dataset was analysed alongside eleven physical, financial and locational factors. Interestingly, the hedonic pricing model results showed that only four characteristics are value-affecting across the selected properties: namely (1) Granularity of the property income, (2) Distance from the nearest motorway, (3) Distance to the nearest town centre and (4) Gross internal floor area. A chi–test confirmed that there was no significant difference between the modelled values and the supplied property valuations.

Findings

This preliminary study offers valuable insight into MLI property market drivers and could easily form a simple decision-making tool to examine potential MLI opportunities in this developing real estate asset class.

Originality/value

In detailing these key MLI property features, current research is limited and focused primarily on market commentary. New knowledge on the MLI property market can provide a platform creating interesting opportunities for fund managers with an intensive management engagement strategy.

Article
Publication date: 3 August 2018

Kwabena Mintah, David Higgins and Judith Callanan

Uncertainties in residential property investment performance require that real estate assets are designed in a flexible manner to respond to impacts of market dynamics…

Abstract

Purpose

Uncertainties in residential property investment performance require that real estate assets are designed in a flexible manner to respond to impacts of market dynamics. Though estimating the cost of flexibility is straightforward, assessing the economic value of flexibility is not. The purpose of this study is to explore the potential practical application of real option analysis to determine the economic value of a switching output flexibility embedded in a residential property investment in Australia. The study involves the exploration of an optimal strategy for investment in a residential development through real option analysis and valuation of a mixed use investment.

Design/methodology/approach

The real option valuation model developed by McDonald and Siegel (1986) is adopted for the evaluation because the switching output flexibility is likened to a perpetual American call option with dividend payout.

Findings

Through real option analysis, the economic value of switching output flexibility of the mixed use building was determined to be higher than the initial upfront costs. Moreover, a payoff of about $4million was determined to be the value of the switching output flexibility, therefore justifying upfront investments in flexibility as an uncertainty and risk management tool.

Practical implications

This application is an important demonstration of the practical use of options pricing techniques (real options analysis) and delivers further evidence needed to support the adoption of real option valuation in practice. Flexibility can also enhance risks and uncertainty management in residential property investment better than the adjustment of discount rates.

Originality/value

There is limited evidence on the use of real options techniques for the valuation of switching output flexibility in practice, and this comes as an original application; both the case study and data are all initial applications of switching flexibility in the Australian property market.

Details

Journal of Financial Management of Property and Construction, vol. 23 no. 2
Type: Research Article
ISSN: 1366-4387

Keywords

Article
Publication date: 6 December 2017

Kwabena Mintah, David Higgins, Judith Callanan and Ron Wakefield

Real option valuation is capable of accounting for uncertainties in residential development projects but still lacks practical adoption due to limited evidence to support…

Abstract

Purpose

Real option valuation is capable of accounting for uncertainties in residential development projects but still lacks practical adoption due to limited evidence to support application of the theory in practice. The purpose of this paper is to use option valuation to value staging option embedded in residential projects and compare with results from DCF to determine which of the two methods delivers superior results.

Design/methodology/approach

The fuzzy payoff method (FPOM), a real options model that uses scenario planning approach to generate a range of figures, from which a single-numerical value is computed for decision-making.

Findings

The results showed that the use of a range of figures was able to represent uncertainties to a higher degree of accuracy than the static DCF. As a result, the FPOM was able to capture about 3 per cent of the value of the project that was missed by the DCF. The staging option offers an opportunity to abandon unprofitable phases of a project, thereby limiting downside losses. Thus, real option models are practically applicable to cases in property sector.

Practical implications

Residential property developers must consider flexibility in financial feasibility evaluation of development because of the embedded value in uncertain property projects. It is important to account for optionality in financial evaluation of property projects for value maximisation.

Originality/value

The FPOM has been used for the first time to evaluate a horizontal phasing of a residential development project.

Details

International Journal of Housing Markets and Analysis, vol. 11 no. 1
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 16 March 2022

Catherine Brentnall and David Higgins

This paper seeks to energise discussion around philosophical assumptions in entrepreneurship education (EE). Far from being abstract considerations, this paper underscores…

Abstract

Purpose

This paper seeks to energise discussion around philosophical assumptions in entrepreneurship education (EE). Far from being abstract considerations, this paper underscores that philosophical assumptions – which are embodied in research products and inherited from others – have practical implications.

Design/methodology/approach

The study’s approach is to purposefully unsettle taken-for-granted assumptions implicit within 44 influential articles which have been said to reveal EE's Invisible College. The authors utilise three heuristic tools offered by problematisation – identifying paradigmatic assumptions, (re)conceptualising subject matter and making a reversal – to explore the implications of the meta-theoretical underpinnings of this body of work. The goal of this paper is not to find a definitive answer to the question “what is EE's underlying philosophy?” but rather ask, “what can we learn about philosophical assumptions by reconsidering this particular set of influential articles at a deep level?”

Findings

With some notable expectations, EE's Invisible College is a place where ideas about an external social reality accessible to the dispassionate researcher are implicitly accepted, where assumptions about the possibility of objective knowledge and the superiority of scientific methodology dominate and where functionalist research products reproduce the social status quo. Thus, whilst the EE research studied might appear diverse at a surface level (topics, research design, inter-disciplinary perspective), diversity is less apparent when considering the deeper, philosophical assumptions which underpin this body of work.

Originality/value

Revealing assumptions which are embodied within research products may prompt critical thinking about the practical implications of research philosophies in the field of EE. In considering the implications of philosophical assumptions, a connection is made between problems that are observed at surface level – from lack of legitimacy, criticality and taken for grantedness of the field – to the deeper hidden system of ideas which lies beneath. Having highlighted potential problems of these deeper assumptions, the paper concludes by posing questions in relation to the type of research that is pursued and legitimised in the field of EE, the socialisation of researchers and the implications for criticality in the field. Such issues illustrate that, far from philosophical assumptions being an abstract or unimportant concern, they are highly practical and have the power to constrain or empower action and the social impact of research.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 28 no. 4
Type: Research Article
ISSN: 1355-2554

Keywords

Article
Publication date: 29 December 2021

David Higgins

The paper seeks to illustrate the impact, a narrative based approach to learning in practice could have in relation to management education, where reflexive critiques may…

Abstract

Purpose

The paper seeks to illustrate the impact, a narrative based approach to learning in practice could have in relation to management education, where reflexive critiques may provide a platform for integrating more closely the appreciation/analysis of the nature of management development with the experiences of practice.

Design/methodology/approach

Collaborative ethnography seeks to connect the self with others and the social with context; it is a method which embraces the opportunity to understand/appreciate lived experience in moments of learning.

Findings

The use of storytelling as a method to aid reflexive dialogue forces the student to move away from their pre-existing assumptions and practices and provide them with the power and conviction to seek out and recognise new meaning and differing alternatives of practice. The implication of this position in terms of an educational agenda involves challenging the “self-conceptions” of what it means to be a “practitioner” (Alvesson and Willmott, 1992; Martin, 1992; Zubizarreta, 2004).

Practical implications

The authors argue that focus must be placed on methods through which learning resides in action. Recognising action in learning allows for the development of management education which re-directs thinking and conceptualising towards understanding the social tensions, complex relations and connections in the co-construction of knowing.

Social implications

The article has sought to exemplify how storytelling can contribute to professional and personal development in new and more enriched ways. This reflexive-style paper presented a perspective from which the writers' values and beliefs are informed, as opposed to making a claim for authenticity and authority in regards to the subject area.

Originality/value

The paper highlights the need to explore imaginative modes of management education practices (Hjorth et al., 2018). Teaching students to simply tell stories is not the goal; rather, it is about sensitising students to the aesthetics of organising and the potential of approaching learning from sensuous and experimental perspectives.

Details

Higher Education, Skills and Work-Based Learning, vol. 12 no. 5
Type: Research Article
ISSN: 2042-3896

Keywords

Article
Publication date: 1 January 1987

Evelyn S. Meyer

When the first edition of Poems by Emily Dickinson was published in 1890, Samuel G. Ward, a writer for the Dial, commented, “I am with all the world intensely interested…

Abstract

When the first edition of Poems by Emily Dickinson was published in 1890, Samuel G. Ward, a writer for the Dial, commented, “I am with all the world intensely interested in Emily Dickinson. She may become world famous or she may never get out of New England” (Sewall 1974, 26). A century after Emily Dickinson's death, all the world is intensely interested in the full nature of her poetic genius and her commanding presence in American literature. Indeed, if fame belonged to her she could not escape it (JL 265). She was concerned about becoming “great.” Fame intrigued her, but it did not consume her. She preferred “To earn it by disdaining it—”(JP 1427). Critics say that she sensed her genius but could never have envisioned the extent to which others would recognize it. She wrote, “Fame is a bee./It has a song—/It has a sting—/Ah, too, it has a wing” (JP 1763). On 7 May 1984 the names of Emily Dickinson and Walt Whitman were inscribed on stone tablets and set into the floor of the newly founded United States Poets' Corner of the Cathedral of St. John the Divine in New York City, “the first poets elected to this pantheon of American writers” (New York Times 1985). Celebrations in her honor draw a distinguished assemblage of international scholars, renowned authors and poets, biographers, critics, literary historians, and admirers‐at‐large. In May 1986 devoted followers came from places as distant as Germany, Poland, Scandinavia, and Japan to Washington, DC, to participate in the Folger Shakespeare Library's conference, “Emily Dickinson, Letter to the World.”

Details

Reference Services Review, vol. 15 no. 1
Type: Research Article
ISSN: 0090-7324

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