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Article
Publication date: 13 March 2007

Kim Hin (David) Ho

The paper aims to form system dynamics modeling in introduced in conjunction with econometric analysis and planned scenario analysis which will uniquely structure the…

2019

Abstract

Purpose

The paper aims to form system dynamics modeling in introduced in conjunction with econometric analysis and planned scenario analysis which will uniquely structure the process whereby the ex ante capital values of the prime retail real estate sector.

Design/methodology/approach

The integrated system dynamics model investigates the structural factors affecting a unique expectation‐centered capital value (CV) formation of the prime retail real estate sector, through system dynamics modeling, econometric analysis , and the analysis of planned scenarios. This model extends beyond the usual lags and time line aspect of the price discovery process. The retail real estate sector is investigated within the Singapore context, as this sector changes dynamically and non‐linearly in relation to rental, cost and general demand expectations and to exogenous shocks like the Severe Advanced Respiratory Syndrome (SARS) outbreak. These macroeconomic factors are introduced to investigate their impact on retail space CVs through sensitivity analysis, during the simulation period of 20 quarters from the zero reference quarter (2Q2002).

Findings

The paper finds that simulation runs of the expectations‐centered system dynamics model are based on three scenarios. Sensitivity analysis is conducted for each scenario. Optimistic scenarios' CVs are lower than those of the likely scenario, owing to developers forming excessively high expectations that cannot be met by the actual rental levels. Pessimistic scenarios' CVs are highest. Based on bounded logic and the conditions for all scenarios, there are huge differences in expectations resulting in a large disparity in the endogenous CVs. Low actual rents are primarily due to poor informational efficiency, as the prime retail real estate sector is not transparent enough, and that many transactions are privately closed. Expectations cannot be met as the market information is not disseminated extensively through the agents and players. The scenarios clearly highlight the problem of informational non‐availability in the sector. The main policy implication is a need for a more transparent system of sharing rental and pricing information for the retail real estate sector, which is meaningful for real estate developers, investors and urban planners to sustain the retail real estate sector's viability.

Originality/value

This paper takes system dynamics modeling to the next level of incorporating econometric analysis, to estimate the sensitivity of retail rent to cost and the change in retail rent, for effectively structuring the dynamic process whereby the ex ante CVs of the prime retail sector in Singapore are formed and assessed, through a unique and rigorous expectations‐centered system dynamics model of rents, cost, retail stock, general demand and exogenous factors.

Details

Journal of Property Investment & Finance, vol. 25 no. 2
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 1 October 1997

Éamonn D’Arcy, Sotiris Tsolacos and Tony McGough

Presents the findings of the first comparative econometric investigation into the influence of demand side forces on retail rent determination in European cities. Examines…

1646

Abstract

Presents the findings of the first comparative econometric investigation into the influence of demand side forces on retail rent determination in European cities. Examines five major retail centres ‐ Amsterdam, Brussels, Hamburg, London and Paris ‐ over the period 1980 to 1994. Estimates for each city a theory consistent model which tests influences of GDP, retail sales and consumer expenditure on changes in retail rents. Univariate and multivariate regressions show that the relative explanatory capabilities of these influences exhibit a notable degree of variation between the cities. A time series cross‐sectional analysis demonstrates that contemporaneous changes in GDP are the most important common determinant of retail rents across the cities and that the process of rent determination in Paris is influenced by different structural factors from the other cities examined.

Details

Journal of Property Valuation and Investment, vol. 15 no. 4
Type: Research Article
ISSN: 0960-2712

Keywords

Article
Publication date: 2 August 2022

Ahmad Gamal and Muhammad Joko Romadhon

The aim of this research is to provide a new understanding of the concept of visibility in the realm of property research. Further, this study could propose a more…

Abstract

Purpose

The aim of this research is to provide a new understanding of the concept of visibility in the realm of property research. Further, this study could propose a more accurate way of calculating retail unit rental price based on visibility. An accurate visibility quantification can influence rent negotiations between shopping mall management and potential tenants. This study can also assist shopping center management, shop owners and architects to have a better mechanism for determining the visibility value and the effect on the retail unit rental price.

Design/methodology/approach

The study uses data from 153 indoor retail stores in Jakarta and a sequential-transformative mixed method to answer an important question for modern retail management: How much would indoor store visibility affect rent? The authors developed a method to accurately measure an indoor retail store's object-based isovist – a visual field in which a number of observers can view the particular indoor store.

Findings

The study found that on average, each additional square meter person of visibility increases indoor retail rent price as much as IDR 40.74/sq m/month (USD 0.0027). Since visibility value is a variable with the greatest inter-store variation in this data set, the rent price difference between two stores with maximum and minimum visibility can reach IDR 100,904.62/sq m/month (USD 6.90). This finding is not just statistically but also financially significant since indoor inter-store retail rent price variation that can be directly attributed to visibility is about 38.4% of the average rent price in this data set.

Practical implications

Along with the rapid growth of e-commerce, numerous commercial properties are struggling to provide customers with a positive and distinct experience. Improving visibility can be a key spatial factor that will help shopping center designers, owners and management. The authors’ research can help shopping mall managers determine each store's optimum rent based on its visibility when negotiating with potential tenants.

Originality/value

The aim of this research is to provide a new understanding of the concept of appearance in the realm of property research. Further, this study could propose a more accurate way of calculating retail unit rental price according to the concept of visibility.

Details

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

Keywords

Article
Publication date: 7 March 2016

Qiulin Ke and Wencan Wang

– The purpose of this paper is to investigate the factors that affect the retail rent of shopping centres in Wuhan, an important city in central China.

Abstract

Purpose

The purpose of this paper is to investigate the factors that affect the retail rent of shopping centres in Wuhan, an important city in central China.

Design/methodology/approach

The study uses a data set of 68 shopping centres in urban Wuhan. A regression model is constructed to estimate the impact on retail rent of a composite range of variables that would capture the physical characteristics, spatial characteristics, potential attractiveness of shopping centres and market condition.

Findings

The empirical findings suggest the ceiling height, closeness to metro line station, being situated in commercial central area, vacancy rate and income have significant impact on rental level. Unexpected, the retail mix has a significant negative impact on rent. The impact of the more determining factors found in Western research – size, age, parking space and anchor tenant – is not supported in the Wuhan study.

Practical implications

While 68 shopping centres are included in the test, the sample size is relatively small. The comparatively short history of retail market in Wuhan would not allow to test the rent adjustment process.

Originality/value

This is the first paper to investigate retail rent determinants in a second-tier city in China. The results of the study give designers, developers and investors critical insights into the determinants of retail rent in an emerging market.

Details

Journal of Property Investment & Finance, vol. 34 no. 2
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 27 September 2011

Jian Liang and Mats Wilhelmsson

The purpose of this paper is to estimate the determinants of the retail space rent in Shanghai.

1285

Abstract

Purpose

The purpose of this paper is to estimate the determinants of the retail space rent in Shanghai.

Design/methodology/approach

Hedonic model and spatial regression models are used in the paper. The problem of spatial autocorrelation is tested by Moran's I statistics, and the root mean square error (RMSE) test is performed to find out the best model.

Findings

The significant explaining variables are the age, the area of retail space, the distance to the Jing An CBD centre, the type of the retail and the district of the property. A new classification of district in retail research context is suggested in this paper, and it is proved to be better than the districts set up by government to explain the retail rent variation.

Originality/value

This paper presents the first empirical study about the retail rental market in Shanghai. The research helps retail property investors and retail tenants deepen their understanding of the retail market in Shanghai. Spatial econometrics techniques are first introduced into the empirical retail rent research to produce a more precise estimation.

Details

Journal of Property Investment & Finance, vol. 29 no. 6
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 1 April 1992

Neil Crosby, Geoffrey Keogh and Geraldine Rees

Examines the methodological issues that arise in generatingstandardised transaction data for use in analysing the determinants ofretail rents. Looks at the issues raised…

Abstract

Examines the methodological issues that arise in generating standardised transaction data for use in analysing the determinants of retail rents. Looks at the issues raised by the use of comparative information and the existence of widely accepted conventions for adjusting comparative evidence to allow for the specific physical and legal characteristics of individual properties. Concludes by questioning the need to test valuation convention against market evidence and the notion of open market value is reassessed.

Details

Journal of Property Valuation and Investment, vol. 10 no. 4
Type: Research Article
ISSN: 0960-2712

Keywords

Article
Publication date: 1 May 1988

Ernest Raiklin

Studies concerning Soviet taxation demonstrate a diversity of opinions on the nature of turnover taxes. Four major views on the subject have emerged: (1) turnover taxes…

107

Abstract

Studies concerning Soviet taxation demonstrate a diversity of opinions on the nature of turnover taxes. Four major views on the subject have emerged: (1) turnover taxes are simply a sales (excise) tax on articles' of consumption sold to the Soviet consumer; (2) not all turnover taxes are a sales tax, some of them are a substitute for rent on production of certain industrial materials; (3) in addition to being a sales (excise) tax on consumer goods and rent on some industrial materials, there exists a third type of turnover tax which is levied on agricultural production of the peasantry; (4) turnover taxes are a portion of the surplus product produced in industry and agriculture.

Details

International Journal of Social Economics, vol. 15 no. 5/6
Type: Research Article
ISSN: 0306-8293

Article
Publication date: 1 May 1996

Patrick McAllister

Turnover rents have become an accepted part of the retail property market, particularly in managed shopping centres, airports, motorway service stations and railway…

2858

Abstract

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.

Details

Journal of Property Valuation and Investment, vol. 14 no. 2
Type: Research Article
ISSN: 0960-2712

Keywords

Article
Publication date: 1 April 1992

Richard Barkham

Considers the potential impact of seven‐day trading on the spatialpattern of retail rents. Notes that the Institute of Fiscal Studiespredicts that Sunday trading will have…

1882

Abstract

Considers the potential impact of seven‐day trading on the spatial pattern of retail rents. Notes that the Institute of Fiscal Studies predicts that Sunday trading will have no appreciable effect on the overall level of turnover in the retail sector resulting in a decline in the real value of retail rents. Concludes that shopping areas in large town centres are most vulnerable to a decline in retail activity.

Details

Journal of Property Valuation and Investment, vol. 10 no. 4
Type: Research Article
ISSN: 0960-2712

Keywords

Article
Publication date: 11 October 2011

Chung Yim Yiu

The purpose of this paper is to study empirically the effect of a pedestrianisation scheme on retail rent, in a case study in Hong Kong.

1101

Abstract

Purpose

The purpose of this paper is to study empirically the effect of a pedestrianisation scheme on retail rent, in a case study in Hong Kong.

Design/methodology/approach

Most of the previous studies on the impacts of pedestrianised areas on the environment were qualitative ones, and without controls. This study, in contrast, uses panel market data in Hong Kong to estimate the effect in a two‐street‐two‐period controlled model.

Findings

The results show a net 17 per cent increase in rental value of retail shops in the pedestrianised area is achieved, ceteris paribus.

Research limitations/implications

Sample size and number of case study are not large enough to make robust conclusions; some other uncontrollable variables may well be attributed to the increase in rents.

Practical implications

Retail rent is found empirically to be dependent of the external environment.

Social implications

Shoppers' preference for pedestrianisation schemes can be indirectly quantified by the change of retail rent.

Originality/value

This paper presents the first two‐street‐two‐period panel empirical test on the effect of pedestrianisation scheme on retail rent.

Details

Journal of Place Management and Development, vol. 4 no. 3
Type: Research Article
ISSN: 1753-8335

Keywords

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