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Article
Publication date: 3 April 2019

Kwasi Gyau Baffour Awuah and Frank Gyamfi-Yeboah

Although several factors influence property value determination depending on the market, relevant studies in sub-Saharan Africa (SSA) often fail to analyse the impact of factors…

Abstract

Purpose

Although several factors influence property value determination depending on the market, relevant studies in sub-Saharan Africa (SSA) often fail to analyse the impact of factors, such as unexpired term of leasehold interest and ground rent, which are also germane to market transactions and value determination. This study aims to examine the effect of unexpired term of leasehold interests and ground rent on the valuation of residential properties in Ghana.

Design/methodology/approach

A questionnaire instrument was used to collect the views of a sample of professional real estate valuers on the relevance of these and other factors that affect value. In addition, the valuers were tasked to value a residential property located in Accra, Ghana. Ordinary least squares and quantile regression models were thereafter used to analyse the data to determine the effect of the subject variables on value.

Findings

The study finds a significant relationship between valuers’ views on the relevance of unexpired term of leasehold interest and the value placed on residential properties. Further, the respondents who viewed ground rent as an important factor in estimating values placed significantly lower values than those who viewed it as less important.

Research limitations/implications

The findings suggest that the respondents may have split opinion on the existing anecdotal evidence that market participants ignore the unexpired term of leasehold interest, an issue that should be settled in theory. The findings also highlight the diversity of opinion on some of the fundamental factors that affect value and the need to build consensus to prevent excessive variation in value estimates among valuers.

Originality/value

The study makes a significant contribution in terms of extending the existing literature by analysing the impact of unexpired term of leasehold interests and ground rent on residential property values based on empirical data, issue(s) which have often been ignored by existing studies. Findings from the study also provide insights into additional possible causes of valuation errors in Ghana and SSA, which are useful for policy formulation and practice.

Details

International Journal of Housing Markets and Analysis, vol. 12 no. 3
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 6 February 2017

Wei Xu, Robyn Alexandra Davidson and Chee Seng Cheong

The purpose of this paper is to examine how capitalising operating leases under IFRS 16/AASB 16 affects the financial statements and value relevance of financial information. In…

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Abstract

Purpose

The purpose of this paper is to examine how capitalising operating leases under IFRS 16/AASB 16 affects the financial statements and value relevance of financial information. In doing so, limitations of exiting methods are highlighted and improved upon.

Design/methodology/approach

Imhoff et al.’s (1991) constructive method for capitalising operating leases is improved upon and used to restate the financial statements of 165 S&P/ASX200 companies. The financial position, key ratios and value relevance are tested for significant differences.

Findings

The results provide evidence that capitalising operating leases affects financial statements and value relevance.

Originality/value

Imhoff et al.’s (1991) constructive method has been refined, providing an improved method for capitalising operating leases than the one that has been used in the past. From a practical perspective, this research provides evidence supporting the “right-of-use” method proposed by the IASB which will see previous off-balance-sheet leases recognised.

Details

Pacific Accounting Review, vol. 29 no. 1
Type: Research Article
ISSN: 0114-0582

Keywords

Article
Publication date: 13 December 2021

Nick Mansley and Zilong Wang

Long lease real estate funds (over £15bn in Q3 2020) have emerged as an increasingly important part of UK pension fund real estate portfolios. This paper explores the reasons for…

Abstract

Purpose

Long lease real estate funds (over £15bn in Q3 2020) have emerged as an increasingly important part of UK pension fund real estate portfolios. This paper explores the reasons for their dramatic growth, their characteristics and performance.

Design/methodology/approach

This study uses data for the period 2004–2020 collected directly from fund managers and from AREF/MSCI and empirical analysis to explore their characteristics and performance.

Findings

Pension fund de-risking and regulatory guidance have supported the dramatic growth of long lease real estate funds. Long lease real estate funds have delivered strong risk-adjusted returns relative to both balanced property funds (with shorter lease terms) and the wider property market. This relative performance has been particularly strong when wider property market performance has been weak. Long lease funds have objectives aligned with liability matching and their performance suggests they are lower risk (more bond-like) investments. In addition, our analysis highlights they are far less responsive to the wider property market than balanced funds. However, they are not significantly different from balanced property funds in terms of their short-term relationship with gilt yield movements.

Practical implications

For pension funds and other investors the paper highlights that long lease real estate funds offer a different exposure than balanced property funds. Long lease funds have objectives more closely aligned to the overall objectives for pension fund investment but are not significantly more reliable than balanced property funds in the short-term as a liability hedge. For real estate fund managers, occupiers, developers and others active in the real estate market, the paper highlights why these funds have been (and are likely to remain) attractive to investors leading to substantial demand for long lease real estate investments.

Originality/value

This is the first study to review this increasingly important part of the UK real estate fund universe.

Details

Journal of Property Investment & Finance, vol. 40 no. 6
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 9 May 2008

Howard Cooke and Simon Woodhead

The purpose of this paper is to look at the problem caused by the operation of break clauses contained in commercial leases – a predominantly UK phenomenon, a consequence of…

1193

Abstract

Purpose

The purpose of this paper is to look at the problem caused by the operation of break clauses contained in commercial leases – a predominantly UK phenomenon, a consequence of longer lease terms.

Design/methodology/approach

The pitfalls that can befall a corporate occupier are numerous and the authors of this paper share some of their recent experiences to highlight issues that can arise and how a Corporate Real Estate Manager or advisor can avoid or minimise those risks.

Findings

For corporate occupiers, the operation of a break clause can be fraught with difficulty and its successful implementation requires a strategy to be put in place well in advance of the break date.

Originality/value

The paper shows how turmoil in the wider financial market could make the flexibility that breaks offer very important to certain businesses.

Details

Journal of Corporate Real Estate, vol. 10 no. 2
Type: Research Article
ISSN: 1463-001X

Keywords

Article
Publication date: 10 August 2010

Isaac Ayodele Olatunji

The purpose of this paper is to examine the medium‐term tenure option, in capital valuation terms, through an empirical study of 232 households in 39 tenement properties in…

Abstract

Purpose

The purpose of this paper is to examine the medium‐term tenure option, in capital valuation terms, through an empirical study of 232 households in 39 tenement properties in Barkinsalle and Saukakahuta, two neighborhoods of Minna, Nigeria widely associated with poor households.

Design/methodology/approach

An empirical approach was used. Data were obtained through questionnaires from six real estate firms and 232 households in the study area. The tenancy statuses, rental values, contract rents, terms and durations of tenancies were some of the data elicited.

Findings

Using contemporary valuation techniques it was affirmed that a typical medium‐term lease from 2009 to 2018 would produce substantial capital value between N59,000.00 (US$393.33) and N90,000.00 (US$600.00).

Research limitations/implications

This research is limited only to cases where profit rent advantages are clearly established. The institutional settings needed to sustain leasehold profit rents have to be identified.

Practical implications

Tenants need valuation advice on medium‐term leasehold rights with promises of profit rent advantages. There is need to sensitize both landlords and tenants as to the mutual benefits.

Social implications

Properly harnessed, the capital value amount could support access to micro‐credit, an essential tool for sustainable fight against urban poverty, through some established financial institutions and special public agencies in Nigeria.

Originality/value

No previous study of Minna had verified, quantitatively and empirically, that medium‐term leases under the parameters empirically specified in the paper would produce such substantial capital values.

Details

International Journal of Housing Markets and Analysis, vol. 3 no. 3
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 1 January 2006

Moira Hamilton, Lay Cheng Lim and William McCluskey

This paper aims to contribute to the theory, practice and development trends in relation to commercial property leases.

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Abstract

Purpose

This paper aims to contribute to the theory, practice and development trends in relation to commercial property leases.

Design/methodology/approach

The paper utilises three key methodological approaches to the research, namely, case studies, desktop literature review and questionnaire survey analysis. This approach enables the in‐depth analysis of both primary and secondary data in relation to the wider commercial property leasing market.

Findings

The main findings from an analysis of the case study cities demonstrate clearly that office tenants are requiring shorter lease terms, more tenant break options and rent reviews to market value.

Research limitations/implications

The paper relates to the development of commercial property leases. While the research inferences are drawn from four major cities they would nonetheless represent a similar pattern from across the UK.

Practical implications

The findings of this paper should be of practical benefit to those involved in the drafting of commercial leases and in particular the management and leasing of commercial property.

Originality/value

This paper presents the results of original empirical research utilising data drawn from several authoritative sources. The value of the work lies in the lease patterns that have been discovered through the case studies analysis.

Details

Property Management, vol. 24 no. 1
Type: Research Article
ISSN: 0263-7472

Keywords

Article
Publication date: 1 August 1985

David J. Abraham

Despite the fact that almost everyone connected with the management or administration of a building will understand the meaning of the term, there is no statutory definition of…

Abstract

Despite the fact that almost everyone connected with the management or administration of a building will understand the meaning of the term, there is no statutory definition of the service charge in relation to commercial leases — and this state of affairs is a reliable guide to the complexity of the subject. The closest that statute comes to providing a comprehensive definition of the term is in Schedule 19 to the Housing Act 1980 which applies only to flats. Paragraph 1 of Schedule 19 states:

Details

Facilities, vol. 3 no. 8
Type: Research Article
ISSN: 0263-2772

Article
Publication date: 5 October 2010

Wilfred K. Anim‐Odame, Tony Key and Simon Stevenson

There is a general consensus that residential submarkets exist, but the basis upon which these are specified remains the subject of debate. The purpose of this paper is to model…

Abstract

Purpose

There is a general consensus that residential submarkets exist, but the basis upon which these are specified remains the subject of debate. The purpose of this paper is to model data on different residential locations in Ghana to show how the submarkets have performed over the past 16 years.

Design/methodology/approach

The paper employs hedonic modelling based on 3,250 sale transactions and 1,130 rental transactions from 1992 to 2007.

Findings

The results demonstrate that five residential real estate characteristics – location, detached, landscaping quality, gross internal areas and plot size – predominate in the explanation of both rental and transactions prices across all submarkets. They also highlight points of variation between the submarkets. An understanding of the impact of these features on residential price and rent is important for capital and rental valuation.

Originality/value

This paper analyses historic performance of the residential market, both at the aggregate and disaggregate level to place the housing market in an investment context.

Details

International Journal of Housing Markets and Analysis, vol. 3 no. 4
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 1 March 2005

Martin B. Trundle

Until recently, occupiers have ignored the financial benefits real estate can add to the value of their firms. Corporate real estate (CRE) is now on the corporate agenda and CRE…

Abstract

Until recently, occupiers have ignored the financial benefits real estate can add to the value of their firms. Corporate real estate (CRE) is now on the corporate agenda and CRE executives are being challenged by shareholders and senior management to employ best practice techniques to unlock the hidden value in the firm’s real estate portfolio. This paper offers a practical decision framework to allow this to happen and explores the potential for them and for real estate investors to capture this value. The paper is based on the author’s experience of advising occupiers and investors and his increasing knowledge of corporate finance principles.

Details

Journal of Corporate Real Estate, vol. 7 no. 1
Type: Research Article
ISSN: 1463-001X

Keywords

Content available
Article
Publication date: 3 February 2012

Pat McAllister

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Abstract

Details

Property Management, vol. 30 no. 1
Type: Research Article
ISSN: 0263-7472

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