Real Estate Investment and Finance
CRER has one of the strongest groups of real estate academics in Europe researching in the areas of investment and finance, recently reinforced still further by the arrival of Professor George Matysiak and Dr. Gianluca Marcato.
There is a long running programme of continuing research in four main areas: portfolio and equilibrium pricing theory; performance measurement and benchmarking; the linkages between asset markets, and financial innovation and the application of corporate finance to real estate markets. Much of this research has direct industry applications, reflected in industry funding, in consultancy opportunities and in training initiatives. Some of the more complex analytic work has appeared in economics journals and collections, further emphasising the multi-disciplinary perspective of the group.
Recent research topics include applications of portfolio and equilibrium pricing theory to commercial property, performance measurement and bench marking, investigating linkages between asset markets, studies of financial innovation in the real estate sector and pioneering work in applying corporate finance to property markets.
Amongst the real estate investment research that has achieved world-wide recognition is the continuing series of papers by Peter Byrne and Stephen Lee on risk and portfolio structures in the UK commercial market. This work, which is fundamentally about how investment decisions may be made and how the market changes over time, benefits strongly from their working relationship with Investment Property Databank (IPD), and has been published in the UK, Australia and the USA.
In the area of financial innovation, Colin Lizieri and Charles Ward have updated their earlier research for the Corporation of London in a new report funded by the Corporation; Financial Innovation in UK Property Markets: A Review of Trends and Prospects. This looks at changes to investment and capital flows into UK commercial real estate and examines the impact of the growth of new vehicles and new regulatory structures. A further area that is receiving attention at present is the impact of a tax-neutral UKREIT vehicle on the UK market, as its possible introduction comes closer to fruition. Following work done by Lizieri and Ward with Collett (Applied Statistics at Reading), Matysiak, has recently been working with Alan Gardner at Gerald Eve, looking at the effect of holding periods on strategic and tactical asset management decisions. He has also been doing work on forecasting rental growth and cyclical effects through the use of leading indicators.
Ward’s work (with Hendershott, Aberdeen) on the valuation of leases using option pricing theory and arbitrage paved the way for the growth of research into new appraisal models and has attracted much interest from industry and they have continued this work by analysing corporate equity and ‘bubbles’.
Another recurrent theme of the research group is globalisation and international capital flows in real estate. Examples of this include papers produced by Baum on international investment, which have been published in the US and Australia. Lee has written on the performance of various real estate markets including most recently with Gabrielli (IAUV, Venice) on the Italian market. Lizieri has published papers on capital flows into financial centres, with UK and Canadian support and, with Johnson (San Diego), Soenen (California Polytechnic) and Worzala (San Diego) on exchange rate risk. McAllister has published on European integration and market convergence. Lizieri has been working with Steven Laposa (PricewaterhouseCoopers) on the evolution of real estate capital flows in the transitional economies of Eastern Europe.