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Article
Publication date: 20 May 2020

Andrew Saull, Andrew Baum and Fabian Braesemann

This study presents a structured investigation of the most important causes for delay in commercial real estate transactions. It assesses the potential of digital…

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1023

Abstract

Purpose

This study presents a structured investigation of the most important causes for delay in commercial real estate transactions. It assesses the potential of digital technologies such as “Blockchain”, “Property Passports” or “Automated Valuation Models” to make transactions faster and cheaper.

Design/methodology/approach

The authors conduct a focus group interview to identify the individual steps and the parties involved in real estate transactions. Subsequently, the authors discuss the prospects of digital technologies based on semi-structured interviews with real estate professionals and PropTech executives, and a comprehensive screening of technological solutions offered by PropTech firms.

Findings

The lack of an up-to-date, single pool of standardised property information turns out to be the most critical cause for delay in real estate transactions. However, the most promising technologies to mitigate this problem, in particular digital property passports summarising all relevant building information, face substantial barriers to adoption. The real estate industry has so far not been willing to more openly share data, which is a pre-requiste for the successful introduction of property passports. In addition, the principle of caveat emptor makes a lengthy due diligence process essential for buyers.

Practical implications

The authors conclude that industry-wide collaborations are necessary to help major efficiency gaining technologies to break through. Insurance products should accompany property data log books to guarantee the quality of data provided.

Originality/value

This study considers the potential impact of technologies in the wider context of the complete real estate transaction process. It identifies the major phases of that process and the associated bottlenecks. The authors gather evidence both from industry experts and PropTech executives and contrast their views regarding the potential of digital technologies to remove those bottlenecks.

Details

Journal of Property Investment & Finance, vol. 38 no. 4
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 7 April 2015

Sherif Roubi

The purpose of this paper is to fill an existing gap in the field. A transaction-based hotel price index for Europe is constructed to provide a true measure for hotel real…

Abstract

Purpose

The purpose of this paper is to fill an existing gap in the field. A transaction-based hotel price index for Europe is constructed to provide a true measure for hotel real estate performance. The index will enable investors enhance investment decisions in many ways: to assess individual property performance; to make an objective decision about where to invest and in which property type; to assess the relative performance of hotel assets to all other sectors and consequently reach optimal funds allocation decisions. This will allow investors to time their acquisitions/disposals according to the hotel property cycle.

Design/methodology/approach

Data include 495 hotel property transactions in Europe during the period between 2004 and 2013. Transaction prices and property characteristics were collected from a variety sources published by hotel agents and consultants, property magazines, newspapers, tourist board, individual property and hotel association registers and web sites. Data include property name, sale price, size, time of sale, location, buyers and sellers. A hedonic pricing model is developed where the transaction price is regressed on the different characteristics. The index is calculated by taking the anti-logs of regression coefficients of the year index.

Findings

This paper claims that the hotel property price index (HPPI) portrays a more realistic picture of what happened to hotel property prices in 2008 showing a single digit negative growth vs the hotel valuation index which reports a double digit negative growth rate in European hotel prices during the same year. The real impact of recession showed on hotel property prices in 2009. HPPI shows a crash in hotel property prices by -23.7 per cent in 2009. The year 2011 was marked by more sales transacted through administrators and a looming double-dip recession. Unlike appraisal-based indices, HPPI does not suffer from sticky valuation issues and is not desensitise from distressed properties. Therefore, it was more volatile to distressed situations throughout the period between 2011 and 2013.

Research limitations/implications

Results of this study should be considered with caution. There are limitations associated with transaction data including incompleteness or inaccuracies regarding price data, financing information for each deal, property tenure, and property characteristics.

Practical implications

This work has successfully developed an HPPI for hotel property in Europe. This paper paves the way for transaction-based indices that are more volatile than existing appraisal-based indices. This represents a significant development in tracking price movements of hotel properties in Europe. The index has potential to support research and forecasting of the hotel property cycles.

Originality/value

This paper fulfils an identified need to track hotel property prices and timing the hotel property cycle.

Details

Journal of Property Investment & Finance, vol. 33 no. 3
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 12 September 2016

Abdul Haris Muhammadi, Zahir Ahmed and Ahsan Habib

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…

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2479

Abstract

Purpose

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.

Design/methodology/approach

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

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.

Originality/value

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.

Details

Asian Review of Accounting, vol. 24 no. 3
Type: Research Article
ISSN: 1321-7348

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Article
Publication date: 8 December 2017

Samwel Alananga Sanga

The purpose of this paper is to analyse the impact of title risks on property prices to establish the associated title risk-price premiums across property types and the…

Abstract

Purpose

The purpose of this paper is to analyse the impact of title risks on property prices to establish the associated title risk-price premiums across property types and the moderating effect of occupation strategies for informal transactions.

Design/methodology/approach

Based on household survey data on transactions for 1,514 residential properties in Kinondoni Municipality, Tanzania, binomial logistic regression models were implemented to predict pre-purchase transaction risks. The results of which were used as inputs in mixed effect models to examine the effect of the predicted title risks on (2,010 constant) purchase price for three-bedrooms finished and unfinished housing units and 400 m2 plots.

Findings

Although legal titles have positive overall title risk-price premiums, such premiums hardly accrue from transactions involving finished houses and marginally accrue from vacant plots transactions. On average, unfinished housing purchasers are title risk-averse, “vacant plots” purchasers are title risk-neutral, while “finished housing” purchasers are title risk-lovers.

Research limitations/implications

The sample composition does not include developer-built housing units, the inclusion of which may sway results away from the observations of this study.

Practical implications

Titling alone can hardly be used as a property market stimuli (eliminate transaction risks) unless the market is dominated by unfinished houses.

Originality/value

Existing studies consider neither traded housing products nor pre-purchase transaction risks or consider only one of the two, thus leaving a gap in the literature for which this study sought to bridge. Researchers must incorporate both to arrive at a well-informed conclusion on the potential risks as well as prices achievable in each transaction.

Details

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

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Book part
Publication date: 2 September 2009

Ling Yang and Xueguang Zhou

Interfirm contracts are a ubiquitous economic institution in market economies. In this study, we examine the determinants of one important aspect of interfirm contracts …

Abstract

Interfirm contracts are a ubiquitous economic institution in market economies. In this study, we examine the determinants of one important aspect of interfirm contracts – contract duration. We begin with Joskow's (1987) study that demonstrated that contract duration is governed by mechanisms that economize transaction costs. Our study extends Joskow's study in several ways: First, while Joskow's study focuses on one particular area of extreme resource dependence, between the coal mine and the power company, we examine patterns of contract duration and their determinants across broader economic sectors, thereby providing a more general test of the key ideas in transaction cost economics. Second, we investigate the role of social institutions as a distinct mechanism underlying the design of contract duration, especially in terms of mitigating risks and transaction costs. Finally, by situating our study in China, we extend the research context beyond industrialized market societies to a transitional economy where interfirm contracts are an emerging economic institution. The empirical study is based on the analyses of information on 877 contracts from 620 firms collected in two Chinese cities, Beijing and Guangzhou, in 2000.

Details

Work and Organizationsin China Afterthirty Years of Transition
Type: Book
ISBN: 978-1-84855-730-7

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Article
Publication date: 12 April 2011

Craig A. Depken, Harris Hollans and Steve Swidler

This paper aims to examine the anatomy of a real estate bubble. In the process, the paper identifies three phases of the market's evolution: flips, flops and foreclosures…

Abstract

Purpose

This paper aims to examine the anatomy of a real estate bubble. In the process, the paper identifies three phases of the market's evolution: flips, flops and foreclosures. An examination of the Las Vegas real estate market illustrates the three phases.

Design/methodology/approach

The paper examines transaction data from the metropolitan Las Vegas area (Clark County) from 1994 to 2009. The first part of the analysis identifies the three phases of the bubble and is descriptive in nature. This is followed by more formal tests of Granger causality.

Findings

In the early part of the sample, a large percentage of transactions are speculative or “flips” causing prices to rapidly increase. Eventually, flipping loses its profitability and over the last three years, there is an increasing number of foreclosures leading to falling prices. The descriptive analysis of the Las Vegas market is augmented with causality tests which show that prices were the driving force behind all three phases in the market's evolution.

Research limitations/implications

Future research might focus on underlying structural inter‐temporal relationships to augment the Granger causality tests.

Practical implications

Analysis shows that price is the driving force behind a bubble and that loan modification programs alone will not solve the current housing crisis.

Social implications

Government entities might expand neighborhood stabilization programs to affect both demand and supply of homes. Moreover, it might be prudent to include information related to flipping on multiple listing service agreements. Additionally, local governments should be consistent in their record keeping.

Originality/value

To the best of the authors' knowledge, this is the first paper to examine the housing bubble using an extensive set of transaction data.

Details

Journal of Financial Economic Policy, vol. 3 no. 1
Type: Research Article
ISSN: 1757-6385

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Article
Publication date: 27 July 2018

Daramola Thompson Olapade, Timothy Oluwafemi Ayodele and Abel Olaleye

The purpose of this paper is to examine the of characteristics of Lagos, Nigeria property market and its submarkets on the prism of the market practitioners…

Abstract

Purpose

The purpose of this paper is to examine the of characteristics of Lagos, Nigeria property market and its submarkets on the prism of the market practitioners’ characteristics, market transaction structure and market maturity. This is done with a view to provide information capable of improving the flow of foreign real estate investment to the Lagos property market.

Design/methodology/approach

Primary data were sourced through questionnaire administered on firms of property practitioners in the market. A total of 190 firms were selected using the stratified random sampling technique based on their geographical location. Descriptive statistics and Mann−Whitney U Test were employed for data analysis.

Findings

The results showed that the Lagos property market was characterised by practitioners whose highest level of education was majorly first degree, and with a mean computer literacy ranking of 3.38 on a five-point Likert scale. Also, major transactions in the market included letting and sales. The market maturity index of the market was 2.95 and therefore adjudged as an emerging market. The analysis also revealed that there was no significant difference in the characteristics of the submarkets.

Practical implications

The results of the study are capable of enhancing investment decision in the market.

Originality/value

The study differentiates itself from and adds to the previous studies on market characteristics through an examination of the property market on the prism of the market transaction structure, market practitioners’ characteristics and maturity of the market holistically in the context of an African emerging market.

Details

Journal of Property Investment & Finance, vol. 36 no. 5
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 1 June 2005

Randy Pereira

The use of 501 c. 3 ‘conduit’ ownership and financing vehicles has emerged as an effectivefinancing tool for the real estate needs of many tax‐exempt healthcare and…

Abstract

The use of 501 c. 3 ‘conduit’ ownership and financing vehicles has emerged as an effective financing tool for the real estate needs of many tax‐exempt healthcare and higher education institutions. ‘conduit’ vehicles offer low‐cost, third‐party ownership and financing solutions to other not‐for‐profit 501 c. 3 healthcare and higher education institutions that do not wish to use their own debt to finance real estate assets or that wish to preserve working capital and bond debt capacity for activities that more directly support their core mission. When applied to specific types of property assets and properly structured and documented, these transactions can achieve both off‐balance sheet outcome under all applicable FASB accounting rules and ‘off‐credit treatment’ from the rating agencies reviewing these transactions. However, these balance sheet and rating agency outcomes are highly dependent on a number of considerations tied to the facts and circumstances of each specific transaction. The purpose of this summary is to describe the features and benefits of conduit transactions, along with their unique accompanying financial, accounting and rating agency issues.

Details

Journal of Corporate Real Estate, vol. 7 no. 2
Type: Research Article
ISSN: 1463-001X

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Article
Publication date: 6 July 2012

Sylwia Lindqvist

The purpose of this paper is to provide a theoretical framework for the subsequent analysis of the European Union internal market's concept of transparency in residential…

Abstract

Purpose

The purpose of this paper is to provide a theoretical framework for the subsequent analysis of the European Union internal market's concept of transparency in residential real estate transactions. Specifically, it seeks to identify the essential factors that should be addressed within any such analysis.

Design/methodology/approach

The study is based on a review of the literature on the general concept of transparency, and on other related aspects.

Findings

Based on this study, five dimensions of transparency are identified, namely transparency in transaction procedure, legal information, financing, taxation and transaction costs. The essential points are that an increase in cross‐border transactions increases demand for easy access to information held in other countries. The studied literature focuses on the coordination of legal systems, making systems more uniform and legally secured, and on broadening of the mortgage market. The study highlights the complexities involved in achieving transparency, as well as the length of time that this will take to achieve in practice.

Originality/value

The paper identifies different dimensions of transparency in residential real estate transactions. There is little prior research in the area which focuses specifically on residential transactions. The study therefore draws upon work in other areas, including financial markets and taxation, and places this within a residential housing context.

Details

International Journal of Law in the Built Environment, vol. 4 no. 2
Type: Research Article
ISSN: 1756-1450

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Article
Publication date: 13 July 2017

Hassan F. Gholipour and Muhammad Najib Razali

The aim of this study is to investigate the factors influencing the financial performance of the real estate brokerage (REB) industry in Iran.

Abstract

Purpose

The aim of this study is to investigate the factors influencing the financial performance of the real estate brokerage (REB) industry in Iran.

Design/methodology/approach

The authors use two surveys concerning REB firms from provinces of Iran which were collected by the Statistical Centre of Iran in 2003 and 2011. The authors apply the pooled ordinary least squares and panel fixed-effects regressions to estimate the relationships between the explanatory variables and performance of REB industry.

Findings

The results indicate that in provinces where REB firms invest more in residential properties, vehicles, computers and business software, REB firms are more active in residential and non-residential property sales, and rent transactions have higher levels of financial performance. In addition, the results show that in provinces where REB firms invest more in non-residential properties and office furniture, REB industry has lower levels of financial performance. The authors also find that Iranian REB industry has significantly benefited from international economic and financial sanctions.

Practical implications

In terms of managerial implications, the authors findings potentially serve as guidance for Iranian REB firms to allocate resources and adjust their strategy to enhance their financial performance.

Originality value

Previous studies have typically been conducted in countries where REB firms mainly operate as intermediaries in transactions between property buyers and sellers, whereas in Iran, REB firms not only provide services to their clients but also are very active speculators in the property market. Furthermore, while there have been many studies that have investigated the various determinants of performance and efficiency of REB industry in developed economies, there is scant literature around this topic for Middle Eastern countries.

Details

International Journal of Housing Markets and Analysis, vol. 10 no. 4
Type: Research Article
ISSN: 1753-8270

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