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This paper examines the changes in the length of commercial property leases over the last decade and presents an analysis of the consequent investment and occupational pricing implications for commercial property investments. It is argued that the pricing implications of a short lease to an investor are contingent upon the expected costs of the letting termination to the investor, the probability that the letting will be terminated and the volatility of rental values. The paper examines the key factors influencing these variables and presents a framework for incorporating their effects into pricing models. Approaches to their valuation derived from option pricing are critically assessed. Simulation methododology is applied to the rental and capital valuations of short leases and properties with break clauses. It is concluded that in addition to the rigour of its internal logic, the success of any methodology is predicated upon the accuracy of the inputs.

Examines the implications of European Monetary Union (EMU) for property managers of operational and investment property portfolios. In the first section, the background to the introduction of a single currency is reviewed and the proposed timetable and method of introducing the Euro is discussed. The next section analyses the property management areas which may be affected by EMU. It is argued that the costs and benefits of the introduction of the Euro will be unequally distributed. Key factors will include the pattern of property interests and liabilities in potential member countries. A key variable will be the rate at which the existing currency is converted to the Euro. This will be a determinant of the future value of assets and liabilities and will, therefore, impact on corporate costs, profitability and competitiveness. The degree to which a firm benefits from the elimination of exchange rate uncertainty and transaction costs will depend on its financial structure. Firms which meet liabilities in non‐sterling currencies from revenues raised in such currencies will not benefit to a great extent. The paper argues that the legal implications for continuity of contract will be minimal for property managers. It is suggested that the need to amend information systems and records will be the major cost to many organisations.

Derivatives have been an expanding and controversial feature of the financial markets since the late 1980s. They are used by a wide range of manufacturers and investors to manage risk. This paper analyses the role and potential of financial derivatives investment property portfolio management. The limitations and problems of direct investment in commercial property are briefly discussed and the main principles and types of derivatives are analysed and explained. The potential of financial derivatives to mitigate many of the problems associated with direct property investment is examined.

To identify the property research priorities in the UK, a major survey of Investment Property Forum members was conducted in February 2003. Over 40 property research areas were assessed, including both general and specific property research priorities. UK property research priorities were seen to be different from an earlier USA property research priorities survey (2000) and more closely aligned to a more recent Australian property research priorities survey (2001).

This paper explores the conceptual and methodological issues relating to the valuation and appraisal of commercial properties where revenue generated by the provision of additional services constitutes a significant proportion of the total income flow. The paper focuses on two main areas. First, the valuation and development of the serviced office model is discussed. Second, the implications of the growing interest of landlords in acting as access managers and suppliers to their tenants are considered. The US debate on business enterprise value and hotel appraisal is reviewed. It is concluded serviced offices owner occupiers have two main assets – the tangible property asset and intangible business asset(s) – which are symbiotically linked but separable. In order to appraise these interests valuers need to be able to value businesses and property since the income flows derived from service provision will have different drivers and risk profiles than pure property‐derived income flows.

Given the centrality of data and information to the evaluation and operation of policies to reduce carbon emissions, the purpose of this paper is to investigate potential sources of data within in the UK on the commercial building stock in terms of its physical characteristics, financial performance, energy consumption and environmental performance. The research aimed to increase understanding of the potential sources of data on property attributes, financial performance and energy use or environmental performance, with a particular emphasis on evaluating their strengths and weaknesses in terms of scope, quality, availability and practicability.

This is an explorative, qualitative study that uses semi‐structured interviews conducted with 11 different data holding organisations.

Whilst public sector organisations have the potential to provide the data required for large samples, there are major barriers to obtaining and linking the different databases. Data on the three key data elements (prices, attributes and environmental performance) tend to be split between different governmental agencies. There are likely to be substantial problems (and costs) of linking the databases due, in particular, to definitional differences. There is a conflict between government's public good objective of increasing knowledge of the environmental performance of buildings and its objective of maximising revenues from the commercial exploitation of data. Since the private sector organisations that hold data are commercially motivated, the samples that they have gathered are largely client driven and, consequently, tend to be partial, particular, proprietary, private and product‐related.

Since pricing studies are central to evaluating the effectiveness of eco‐labelling in property markets, this paper improves one's understanding of the role of information and data barriers to improving the allocative efficiency of commercial property markets.

This paper aims to investigate the scale and drivers of cross-border real estate development in Western Europe and Central and Eastern Europe.

Placing cross-border real estate development within the framework of foreign direct investment (FDI), conceptual complexities in characterizing the notional real estate developer are emphasized. Drawing upon a transaction database, this paper proxies cross-border real estate development flows with asset sales by developers.

Much higher levels of market penetration by international real estate developers are found in the less mature markets of Central and Eastern Europe. Analysis suggests a complex range of determinants with physical distance remaining a consistent barrier to cross-border development flows.

This analysis adds significant value in terms of understanding cross-border real estate development flows. In this study, a detailed examination of the issues based on a rigorous empirical analysis through gravity modelling is offered. The gravity framework is one of the most confirmed empirical regularities in international economics and commonly applied to trade, FDI, migration, foreign portfolio investment inter alia. This paper assesses the extent to which it provides useful insights into the pattern of cross-border real estate development flows.

Turnover rents have become an accepted part of the retail property market, particularly in managed shopping centres, airports, motorway service stations and railway stations. Relates to their use for managed shopping centres. Their relative merits have been a source of debate among retailers and property professionals. However, the issue of valuation methodology for retail properties let on turnover leases has not been discussed. Examines the types of turnover lease in the UK and their investment characteristics. The limitations and problems of current valuation approaches are explored. The property market where retail turnover leases are most common ‐ the USA ‐ is also examined in order to assess whether any lessons can be learned. Concludes that turnover leases in the UK are likely to produce complex and varying income flows. Moreover, the usefulness of current valuation techniques will be limited, owing to a lack of comparables and the inherent inflexibility of the techniques themselves.

This paper analyses trends in direct international property investment by British investing institutions in the 1980s and 1990s. Although it is well established that there is home country bias in all investment sectors, evidence is presented which suggests that it is more pronounced in the direct property sector. The main focus is on barriers to international property investment and, therefore, potential sources of segmentation in the property sector. The research addresses a number of issues relating to levels of international property investment, the linkages between the nature of the core business and investment strategies and the relative importance of high diversification costs. This is carried out by an analysis of the most recent data on British institutional investment trends and by a survey questionnaire of British property professionals involved in asset allocation decisions for the investing institutions. The results indicate that: information costs are the most important barrier to international direct property investment, the high cost of executing a global diversification strategy inhibits international property investment, and institutions who have clients and see business opportunities in international centres are more likely to be interested in international property investment opportunities. The data on asset allocation trends support the view that the property market is significantly less integrated than the other securities markets.

The purpose of this paper is to investigate the effect of the crisis on the pricing of asset quality attributes. This paper uses sales transaction data to examine whether flight from risk phenomena took place in the US office market during the financial crisis of 2007-2009.

Hedonic regression procedures are used to test the hypothesis that the spread between the pricing of low-quality and high-quality characteristics increased during the crisis period compared to the pre-crisis period.

The results of the hedonic regression models suggest that the price spread between Class A and other properties grew significantly during the downturn.

Our results are consistent with the hypothesis of an increased price spread following a market downturn between Class A and non-Class A offices. The evidence suggests that the relationships between the returns on Class A and non-Class A assets changed during the period of market stress or crisis.

These findings have implications for real estate portfolio construction. If regime switches can be predicted and/or responded to rapidly, portfolios may be rebalanced. In crisis periods, portfolios might be reweighted towards Class A properties and in positive market periods, the reweighting would be towards non-Class A assets.

The global financial crisis has demonstrated that real estate markets play a crucial role in modern economies and that negative developments in these markets have the potential to spillover and create contagion for the larger economy, thereby affecting jobs, incomes and ultimately people’s livelihoods.

This is one of the first studies that address the flight to quality phenomenon in commercial real estate markets during periods of financial crisis and market turmoil.