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Real estate developers often operate in oligopolistic environments. Pricing strategies must be made in an interactive framework that makes empirical evaluation difficult. This study appeals to economic experiments to examine how developers price their properties, especially when there is an option to market pre‐completed units. In addition, the interaction between bidding for land and pricing the end product is examined. The results indicate that competitor actions are important considerations in pricing decisions. In particular, the profit maximizing pricing strategy depends critically on being competitive, not necessarily being the most aggressive. Interestingly, pre‐completed units sell only at prices that incorporate future price expectations, and successful bids tend to precipitate more aggressive pricing. Finally, competitive bidding and pricing strategies appear to the best profit maximizing strategy.

The purpose of this paper is to investigate the strategy that a turnaround in the USA will portend a turnaround in the UK's economy and property market. For this strategy to operate, it is assumed that the capital and property markets in and between the two nations are highly integrated with endogenous pricing functions.

Given the endogenous assumptions of the conjectured research statement, tests of integration (or segmentation) between two capital and property markets are conducted. Correlation, tracking error analysis, and a multiple systematic risk factor model are used to test the pricing relationships. The methodological form employs variant macroeconomic variable pricing models (MVM) of alternative combinations of systematic affects operating across and between the national markets.

Pricing integration is noted between the UK and US capital markets, while the property markets are economically and statistically segmented. Opportunities for arbitrage based on different prices/returns for equivalent risk exposures are statistically observed between the UK and USA. The effect is that systematic pricing between the two markets cannot be addressed solely by diversification options. This infers a potential for arbitrage (statistically, strategically or in practice) is possible, given that systematic risk exposures between the two markets are not equivalently priced across cyclical phases. In this context it is inferred that the probable measure of pricing differences across the two markets is more than a cyclical lag effect.

The paper delineates the degrees of integration/segmentation in the UK and US property and capital markets as a function of systematic risks in changing economic conditions. These differences support the existence of statistical arbitrage and the specification of investment behaviour as a function of differencing pricing expectations. These findings can assist in the formulation of investment and hedging strategies to assist in managing international portfolios subject to cyclical market exposures. This paper contributes to an understanding of and foundation for testing the nature and impact of cycles on property investment performance as a function of pricing changes.

This paper offers empirical evidence on factors influencing credit spreads on commercial mortgage loans. It extends existing work on the pricing of commercial mortgage loans. The authors examine the relative significance of a range of factors on loan pricing that are lender, asset and loan specific. The research explores and quantifies the sources of spread differentials among commercial mortgage loans. The paper contributes to a limited literature on the subject and serves the purpose of price discovery in commercial property lending. It offers a framework to compare actual pricing with fundamental-based estimates of loan spreads.

Panel analysis is deployed to examine the cross-section and time-series determinants of commercial mortgage loan margins and credit spreads. Using an exclusive database of loan portfolios in the United Kingdom (UK), the panel analysis enables the authors to analyse and quantify the impact of a number of theory-consistent and plausible factors determining the cost of lending to commercial real estate (CRE), including type and origin of lender, loan size, loan to value (LTV) and characteristics of asset financed – type, location and grade.

Spreads on commercial mortgages and, therefore, loan pricing differ by the type of lender – bank, insurance company and debt fund. The property sector is another significant risk factor lenders price in. The LTV ratio has increased in importance since 2012. Prior to global financial crisis (GFC), lenders made little distinction in pricing different LTVs. Loans secured in secondary assets command a higher premium of 50–60bps. The analysis establishes an average premium of 35bps for loans advanced in regions compared to London. London is particularly seen a less risky region for loan advancements in the post-GFC era.

The study considers the role of lender characteristics and the changing regulation in the pricing of commercial mortgage loans and provides a framework to study spreads or pricing in this market that can include additional fundamental influences, such as terms of individual loans. The ultimate aim of such research is to assess whether mortgage loans are correctly priced and spotting risks emanating from actual loan spreads being lower than fundamental-based spreads pointing to tight pricing and over-lending.

The analysis provides evidence on lender criteria that determine the cost of loans. The study confirms that differences in regulation affect loan pricing. The regulatory impact is most visible in the increased significance of LTV. In that sense, regulation has been effective in restricting lending at high LTV levels.

The paper exploits a database of a commercial mortgage loan portfolio to make loan pricing more transparent to the different types of lender and borrowers. Lenders can use the estimates to assess whether commercial loans are fairly priced. Borrowers better understand the relative significance of risk factors affecting margins and the price they are charged. The results of this paper are of value to regulators as they can assist to understand the determinants of loan margins and gauge conditions in the lending market.

The intent of this Practice Briefing is to provide clarity on drivers of property pricing in a changing economic environment. The principal basis of this analysis is to investigate how properties have been priced relative to interest rates over the long haul. Such an insight may help investors navigate the world of property investment in a post zero interest-rate policy (ZIRP) world.

This practice briefing is an overview of the role of economic drivers in pricing property in different economic eras pre- and post-ZIRP. It looks at returns over time relative to risk criteria and growth.

This briefing is a review of property pricing and its relationship to economic drivers and discusses the concept of return premiums as a market indicator to spot under/over-priced property assets in the market.

This briefing considers the implications of identifying salient and pertinent market indicators over time as bellweathers for property pricing. Good property investment is grounded in understanding when assets are under and overpriced relative to investors’ expectations of growth and returns going forward. An understanding of markets and the current indicators thereof can provide investors with insights into those criteria.

This provides guidance on how to interpret markets and get an understanding of property pricing over time.

The purpose of this paper is to examine the challenges faced by Indonesian tax auditors in auditing multinational transfer prices of intangible assets. This study then explores the suitability of mechanisms currently used by Indonesian tax auditors to ensure appropriate tax audit adjustments.

The authors use a qualitative research method involving semi-structured and open-ended interviews with the tax auditors in Indonesia. The authors also include some Indonesia court decisions pertinent to the research question above.

Findings indicate that Indonesian tax auditors face a number of difficulties during the audit of transfer pricing cases derived from intangible property, including a lack of transparency in taxpayers’ bookkeeping; limited taxpayer cooperation in providing data and documents; transfer pricing regulations; and problems related to organization and human resources. The study also finds that Indonesian tax auditors and tax officials handle transfer pricing cases by using a legal basis as reference and by performing a number of activities, including among others, comparable analysis.

The findings of this study should assist policy makers to improve the quality of transfer pricing audit. Also, tax auditors and account representatives who do not have enough experience in auditing transfer pricing cases derived from intangible property rights might use the outcomes of this study as a guide for dealing with those cases.

The purpose of this paper is to investigate changes in the commercial real estate market dynamics as a function of and conditional to the shifts in market state-space environment that can influence agent responses.

The analytical design uses a comparative computational experiment to address the performance of property assets in the current market based on comparison with prior structural patterns. The latent variables developed across market sectors are used to test agent behavior contingent on the perspectives of capital asset pricing conditionals (CAPM) and a behavioral momentum/herd construct. The state-space momentum analysis can assist the comparative analysis of current levels and shifts in property asset performance given the issues that have arisen with the financial crisis of 2007-2009.

An analytic approach is employed framed by a situation-dependent model. This frame considers risk profiles characterizing the perspectives and preferences guiding a delineated market state. This perspective is concerned with the possibility of shifts in market momentum and representativeness conditioning investor expectations. It is observed that the current market (post-crisis) has changed significantly from the prior operations (despite the diversity observed in prior market states). The dynamics of initial findings required an additional test anchored to the performance of the general capital market and the real economy across time. This context supports the use of a modified CAPM model allowing the consideration of opportunity cost in a space-time dynamic anchored with the consideration of equity, debt, riskless asset and liquidity options as they varied for the representative agents operating per market state.

This paper integrates neoclassical and behavioral economic constructs. Combines asset pricing with prospect theory and allows the calculation of endogenous time-preferences, risk attitudes and formulation and testing of hyperbolic discounting functions.

The research shows that market structure and agent behavior since the financial crisis has changed from the investment and valuation perspectives operating as observed and measured from 1970 up to 2007. In contradiction to the long-term findings of Reinhart and Rogoff (2008), but in compliance with common perspectives and decision heuristics often employed by investors, this time things have changed! Discounting and expected rates of return are dynamic and are hyperbolic and not constant. Returns and investment for property assets are situational (market state-space specific) and offer a distinct asset class, not appropriately estimated by many of the traditional financial models.

Assist in supporting insights to measure in errors and equations that result in inefficient resource allocation and beta discounting that supports the financial crisis created by assets subject to long-term decision needs (delta function).

The paper offers a combination and comparison of neoclassic asset pricing using a modified CAPM (two-pass) approach within the structural frame of Kahneman and Tversky’s (1979) prospect theory. This technique allows the consideration of the effects of present bias, beta-delta functions and the operation of the Allais Paradox in market states that are characterized by gains and losses and thus risk aversion and risk seeking behavior. This ability for differentiation allows for the development of endogenous time-preferences and hyperbolic discounting factors characteristic of commercial property investment.

Real estate is the last major asset class without liquid derivatives markets. The reasons for that are not fully known or understood. Therefore, the purpose of this paper is to better understand the main factors that influence the propensity of commercial real estate investors in the UK to employ property derivatives.

The research methodology that was chosen for this research is grounded theory which, in its original form, goes back to Glaser and Strauss (1967). A total of 43 interviews were conducted with 46 real estate professionals in the UK from property investment management firms (investing directly or indirectly in real estate), multi-asset management firms, real estate investment trusts, banks, and brokerage and advisory firms, among others.

The research results show 29 factors that influence the propensity of direct and indirect real estate investors in the UK to employ property derivatives. Out of the 29 factors, the current research identified 12 factors with high-explanatory power, 6 with a contributing role and 11 with low explanatory power. Moreover, factors previously discussed in the literature are tested and assessed as to their explanatory power. The focus of this paper is on those factors with high-explanatory power. From the research data, three main reasons have been identified as the sources of investor reluctance to trade in property derivatives. The first and main reason is related to a mismatch between motivations of property investment managers and what can be achieved with the instruments. The second reason, which ties in with the first one, is a general misunderstanding as to the right pricing technique of property derivatives. Finally, the third reason is a general lack of hedging demand from the investor base owing to the long investment horizons through market cycles.

The research contributes to the literature on property derivatives in various ways. First, it extends the literature on market hurdles in property derivatives markets by testing and extending the hurdles that were proposed previously. Second, the research shows that the existing pricing models need to be extended in order to account for the risk perception of practitioners and their concerns with regard to liquidity levels.

For both theory and practice, the research has shown some limitations in using property derivatives for purposes such as creating index exposure or hedging. Another contribution, in this case to practice, is that this study provides a clearer picture as to the reasons that keep property investment managers away from using property derivatives.

The research results indicate that liquidity per se is not a universal remedy for the problems in the market. In addition to the need for improving the understanding of the pricing mechanism, practitioners should give more thought to the notion of real estate market risk and the commensurate returns that can reasonably be expected when they take or reduce it. This implies that property index futures currently do not price like those on any other investable asset class.

The pricing of professional service has been identified as one of the factors influencing the quality of service and willingness of clients to pay. However, the issue of service pricing is hardly seen as an object of discourse in real estate literature, especially among valuation studies, as it is obtainable in other fields. In Nigeria, it has become the practice for some sets of clients, especially financial institutions, to fix valuers’ remuneration based on the fact that these clients have market advantage. This practice and some other issues around pricing of valuers’ services have been going on for some years with little or no research insights from academics. The purpose of this paper is to examine the pricing system of valuation services within the Lagos property market with the aim of providing information to better valuation practice.

This study assumes an interpretive paradigm and adopts a qualitative research approach. In-depth semi-structured interviews were conducted with 24 registered valuers practising within the Lagos property market. Snowballing sampling technique was employed in selecting the registered valuers who were active in the practice of valuation in the study area. Data collected were analysed using thematic analysis with the aid of NVivo 12 software.

This study finds that the pricing system for valuation services in the study area can be broadly categorised under “negotiation” and “fixed rate” systems while the use of the “professional scale of charges” is more or less non-existent. The study also reveals various forms by which these systems are practised, and issues associated with them as well as the effects they have on valuation practice. The study further reveals the factors responsible for the continuous striving of the present pricing system which includes valuers’ inability to enforce the professional scale, competition in the market, buyers’ market syndrome, the game of numbers and the banks’ strategy to protect their customers. The authors also found that the low pricing of valuation service poses challenges to valuation practice and encourages unprofessional conducts that affect the quality of valuation output. The study also provides, albeit limited, an evidence of the relationship between valuation fee and quality of valuation.

This study is limited to Lagos property market and only the practising valuers. Insights from other major cities and stakeholders in service pricing like clients and regulatory authority may produce more insightful results.

This study provides important insights into valuers’ experience in the area of service pricing and how this affects the delivery of professional services. It also serves as the research blueprint in giving research attention to the service pricing in property valuation practice.

Compares the predictive performance of artificial neural networks to hedonic pricing models, a more traditional valuation tool. The results document similar predictive performance evidenced from both techniques, which contradicts some of the earlier studies which support a position of artificial neural network superiority. Demonstrates that at least 18 per cent of the “normal” property predictions and over 70 per cent of the “outlier” property predictions contained valuation errors greater than 15 per cent of the actual sales price. The combination of these substantial errors and the model‐optimization costs incurred motivate a message of caution before artificial neural networks are adopted by the real estate valuation and/or lending industries.

Information transparency is crucially important in price setting in real estate, particularly when information asymmetry is concerned. This paper aims to examine how a change in government policy in relation to information disclosure and transparency impacts residential real estate price discovery. Specially, this paper investigates how real estate traders determined asking prices in the context of the Scottish housing market before and after the implementation of the Home Report, which aimed to prevent artificially low asking prices.

This paper uses spatial lag hedonic pricing models to empirically observe how residential asking prices are determined by property sellers in response to a change in government policy that is designed to enhance market transparency. It uses over 79,000 transaction data of the Aberdeen residential market for the period of Q2 1998 to Q2 2013 to test the models.

The empirical findings provide some novel insights in relation to the price determination within the residential market in Scotland. The spatial lag models suggest that spatial autocorrelation in property prices has increased since the Home Report came into effect, indicating that property sellers have become more prone to infer asking prices based on prior sales of dwellings in close vicinity. The once-common practice of setting artificially low asking prices seems to have dwindled to a certain extent statistically.

The importance of understanding the relationship between information transparency and property price determination has gathered momentum over the past decade. Although spatial hedonic techniques have been extensively used to study the impact of various property- and neighbourhood-specific attributes on residential real estate market in general, surprisingly little is known about the empirical relationship between spatial autocorrelation in real estate prices and information transparency.