Research

22 pages, 811 KiB

Open AccessArticle

Real Estate Development Feasibility and Hurdle Rate Selection

by Matthew Moorhead, Lynne Armitage and Martin Skitmore

Buildings 2024, 14(4), 1045; https://doi.org/10.3390/buildings14041045 - 08 Apr 2024

Viewed by 353

Real estate developers typically assess potential projects using feasibility analyses and industry-standard heuristics, which include capital costs, return on costs, and a subjective risk measure. This study explores real estate developers’ decision-making practices in selecting hurdle rates and common feasibility analysis techniques, surveying [...] Read more.

Real estate developers typically assess potential projects using feasibility analyses and industry-standard heuristics, which include capital costs, return on costs, and a subjective risk measure. This study explores real estate developers’ decision-making practices in selecting hurdle rates and common feasibility analysis techniques, surveying 225 Australian and New Zealand developers. The main findings are that most developers use specific ‘go/no-go’ hurdle rate mechanisms irrespective of primary real estate type, with the majority using margin on development cost (MDC) or internal rate of return (IRR); the boundaries between traditional speculative development and real estate investment through the use of securitization methods have become blurred; many developers use both quantitative metrics, with qualitative methods and specific structural checks to manage the risks involved; and the two most frequent methods of determining site value prior to acquisition are the residual land value and discounted cash flow methods. Most place a heavy reliance on industry-accepted heuristics and do not have a predetermined process and method for altering or adapting the chosen hurdle rates and benchmarks. This research provides a contribution to property development practice from the Antipodean perspective which until now has been more focused on the UK view, enabling more generalized application internationally. Full article

(This article belongs to the Special Issue Study on Real Estate and Housing Management)

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20 pages, 1012 KiB

Open AccessArticle

Modeling the Volatility of Daily Listed Real Estate Returns during Economic Crises: Evidence from Generalized Autoregressive Conditional Heteroscedasticity Models

by Mo Zheng, Han-Suck Song and Jian Liang

Buildings 2024, 14(1), 182; https://doi.org/10.3390/buildings14010182 - 10 Jan 2024

Viewed by 463

Abstract

In this paper, we focus on the dynamic volatility behavior of the daily Swedish Real Estate Sector Index and analyze the existence and degree of a long-range dependence or asymmetric news effect since 2003. More specifically, we give extra attention to the 2007–2008 [...] Read more.

In this paper, we focus on the dynamic volatility behavior of the daily Swedish Real Estate Sector Index and analyze the existence and degree of a long-range dependence or asymmetric news effect since 2003. More specifically, we give extra attention to the 2007–2008 financial crisis, the 2009–2012 European debt crisis, and the first two years of the global COVID-19 pandemic era (2020–2021). We examine changes in volatility during these extreme events. We apply standard GARCH models, asymmetric GARCH models, and long-memory GARCH models with various error distributions to identify the most accurate volatility models of the daily returns of the Swedish Real Estate Sector Index for the full sample period, January 2003 to June 2021. Our results show that the volatility of the Swedish Real Estate Sector Index is time-varying and highly volatile. The impacts of the global financial crisis, European debt crisis, and COVID-19 pandemic are noticeable. Moreover, the volatility pattern during COVID-19 displays significant time-varying long-range dependence and an asymmetrical news impact, which lead to market inefficiency. Finally, the volatility pattern shows a tendency towards increasing leverage effects and less persistent behavior, indicating that the market stakeholders are highly sensitive to negative returns and becoming quicker to respond to market changes. Full article

(This article belongs to the Special Issue Study on Real Estate and Housing Management)

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38 pages, 698 KiB

Open AccessArticle

The Green Mirror: Reflecting on Sustainability Reporting Practices of Indian and Australian Real Estate Stakeholders

by Raghu Dharmapuri Tirumala and Kruti Upadhyay

Buildings 2023, 13(12), 3106; https://doi.org/10.3390/buildings13123106 - 14 Dec 2023

Viewed by 816

Abstract

Within the real estate sector, the concept of sustainability has traditionally been associated with green building initiatives. This study broadens the scope by examining environmental disclosure practices across a spectrum of stakeholders, including developers, financiers, suppliers, and advisors, within the real estate sectors [...] Read more.

Within the real estate sector, the concept of sustainability has traditionally been associated with green building initiatives. This study broadens the scope by examining environmental disclosure practices across a spectrum of stakeholders, including developers, financiers, suppliers, and advisors, within the real estate sectors of Australia and India. Utilizing the Global Reporting Initiative (GRI) standards to evaluate environmental reporting, this research scrutinizes publicly disclosed company data to assess the sector’s engagement with sustainability. The findings reveal a pronounced focus on emissions and energy, with less attention to other critical factors like biodiversity, materials, and supplier environmental assessment. This selective disclosure suggests a need for a more holistic approach to sustainability reporting. This study also investigates the influence of regional nuances and the integration of international reporting standards, shedding light on the varied practices of sustainability reporting within the industry. Furthermore, this paper examines the relationship between environmental disclosures and financial performance, measured by the economic value added (EVA). It was observed that environmental disclosures do not show a significant correlation with EVA for companies in either country, indicating that current reporting practices do not directly impact financial outcomes as captured by this metric. These findings offer actionable insights for enhancing reporting practices, encouraging a collective approach to address the environmental impacts of real estate, and contributing to the discourse on responsible environmental stewardship. Full article

(This article belongs to the Special Issue Study on Real Estate and Housing Management)

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18 pages, 612 KiB

Open AccessArticle

Developing Place Attachment in Master-Planned Residential Estates in Sydney: The Influence of Neighbourhood Parks

by Chunyan Yang, Song Shi and Goran Runeson

Buildings 2023, 13(12), 3080; https://doi.org/10.3390/buildings13123080 - 11 Dec 2023

Viewed by 829

Abstract

Master-Planned Residential Estate (MPRE) is an integrated housing development form in Australia. MPREs are aimed to build a sense of place attachment and community via the provision of environmental and social infrastructure. Neighbourhood parks are regarded as a significant built environmental factor linked [...] Read more.

Master-Planned Residential Estate (MPRE) is an integrated housing development form in Australia. MPREs are aimed to build a sense of place attachment and community via the provision of environmental and social infrastructure. Neighbourhood parks are regarded as a significant built environmental factor linked to residents’ place attachment and well-being in the literature. Understanding place attachment is crucial for promoting residents’ well-being in neighbourhoods and enhancing the attractiveness of real estates in the housing market. However, we know little about how place attachment is facilitated for park users in neighbourhoods. The psychological process of place attachment in MPREs is unclear in the literature, with a particular lack of qualitative studies in this area. This study explored the psychological process of place attachment and its associations with neighbourhood parks in MPREs in Sydney via a qualitative case study. Semi-structured interviews were conducted with 16 residents residing in two selected MPREs in Sydney during the COVID-19 pandemic in 2022. Interviews found three themes and several subthemes regarding the process of place attachment for park users in MPREs: affect (emotional bonds), behaviour (place-related fulfilment of needs, place-related social bonds, and community participation), and cognition (membership of the community, place-related memory, and cultural significance). This study contributes to understanding place attachment and human-environment relations in sustainable neighbourhoods by adding new items into place attachment models from the perspective of MPREs in Sydney. It provides valuable qualitative evidence gathered during the COVID-19 pandemic. The findings furnish empirical insights for policymakers, developers, and urban planners involved in sustainable neighbourhoods’ development and housing management in Sydney and global regions. Full article

(This article belongs to the Special Issue Study on Real Estate and Housing Management)

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10 pages, 442 KiB

Open AccessArticle

Housing Transfer Inspection: What Are the Priorities?

by Jieh-Haur Chen, His-Hua Pan, Ting-Kwei Wang and Hsi-Hsien Wei

Buildings 2023, 13(10), 2573; https://doi.org/10.3390/buildings13102573 - 12 Oct 2023

Viewed by 545

Abstract

This study aims to discern and assign significance to the crucial inspection items preceding housing transfers, subsequently unveiling their prioritized sequence. Initiating with a literature review, a robust groundwork was laid for expert interviews, which subsequently defined eight distinct facets encompassing a total [...] Read more.

This study aims to discern and assign significance to the crucial inspection items preceding housing transfers, subsequently unveiling their prioritized sequence. Initiating with a literature review, a robust groundwork was laid for expert interviews, which subsequently defined eight distinct facets encompassing a total of 38 items pertinent to housing transfer inspections. Employing the Analytic Hierarchy Process (AHP), the results of an expert survey are analyzed, incorporating 27 valid responses. The outcomes of this research encompass the following: (1) the delineation of eight distinct facets, (2) the compilation of a comprehensive list comprising 38 items, (3) a short list of the top 15 items easier for inspectors to complete for a quick transfer, and (4) the establishment of a priority sequence for housing transfer inspection items. This study effectively resolves the predicament faced by practitioners concerning the selection of appropriate inspection items for housing transfers, and offers clarity regarding their relative significance. Full article

(This article belongs to the Special Issue Study on Real Estate and Housing Management)

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21 pages, 2625 KiB

Open AccessArticle

The Hidden Facets: Uncovering the Influence of Region on Social Housing Unit Distribution in Brazil

by Frederico G. P. Moreira, Lucas E. C. Silva and Victor I. M. dos Santos

Buildings 2023, 13(9), 2208; https://doi.org/10.3390/buildings13092208 - 30 Aug 2023

Viewed by 897

Abstract

The Brazilian housing program, Minha Casa, Minha Vida (MCMV) (My House, My Life), was launched in 2009 to address the housing deficit issue, with the goal of distributing contracted housing units throughout the Brazilian territory. However, the program faces criticisms regarding the distribution [...] Read more.

The Brazilian housing program, Minha Casa, Minha Vida (MCMV) (My House, My Life), was launched in 2009 to address the housing deficit issue, with the goal of distributing contracted housing units throughout the Brazilian territory. However, the program faces criticisms regarding the distribution of these units. Thus, this paper aims to analyze the distribution heterogeneity of these contracted housing units (CHUs). Two analytical approaches were employed: temporal and spatial (states). To achieve this objective, inferential methods such as Ordinary Least Squares (OLS), Spatial Autoregressive Model (SAR), and panel data regressions were employed. The findings indicate that, from a temporal perspective, there is a positive relationship between the urban housing deficit (UHD) and CHUs. However, the relationship is negative from a spatial perspective, characterizing such heterogeneity among the states. In addition, bordering regions are subject to mutual spatial influences in terms of contracted units, thereby reinforcing this heterogeneity over time. Full article

(This article belongs to the Special Issue Study on Real Estate and Housing Management)

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20 pages, 1003 KiB

Open AccessArticle

The Costs of Construction and Housing Prices: A Full-Cost Pricing or Tendering Theory?

by Yihan Guan and Ka-Shing Cheung

Buildings 2023, 13(7), 1877; https://doi.org/10.3390/buildings13071877 - 24 Jul 2023

Cited by 2 | Viewed by 3494

Abstract

While construction costs and housing prices are implicitly examined in the construction economics literature, dedicated studies on their theoretical underpinning are rare. In this study, we investigated the application of different pricing theories in Auckland by testing the relationship between house prices and [...] Read more.

While construction costs and housing prices are implicitly examined in the construction economics literature, dedicated studies on their theoretical underpinning are rare. In this study, we investigated the application of different pricing theories in Auckland by testing the relationship between house prices and construction costs in Auckland from 1995 to 2021. The results contrast the tendering pricing theory, which posits that construction prices are optimal mark-ups unaffected by market demand, with the full-cost pricing theory, which acknowledges the market-dependent nature of pricing. By using the Toda-Yamamoto’s granger-causality test and Pesaran’s Autoregressive Distributive Lag (ARDL) bound tests, we analysed the relationship between the house price index (HPI) and construction cost index (CCI). The result suggests a significant relationship between housing prices and construction costs in both the short and long term, supporting the predominance of the full-cost pricing theory in Auckland’s housing market. The finding highlights the potential need for property industry participants to evaluate the market structure of the construction industry, fostering a more competitive environment and paving the way for more effective supply-related housing policies. Full article

(This article belongs to the Special Issue Study on Real Estate and Housing Management)

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21 pages, 989 KiB

Open AccessArticle

Joint Ventures in the South African Construction Industry: Factors Militating against Success

by Modisaotsile Patrick Seiso, Babatunde Fatai Ogunbayo and Clinton Ohis Aigbavboa

Buildings 2023, 13(5), 1299; https://doi.org/10.3390/buildings13051299 - 16 May 2023

Cited by 3 | Viewed by 2321

Abstract

Joint construction ventures are a global business partnership approach to accomplishing jointly executed construction objectives. The success of joint ventures is not achieved without militating factors and complexity affecting the process. This study assessed the militating factors against joint venture success in the [...] Read more.

Joint construction ventures are a global business partnership approach to accomplishing jointly executed construction objectives. The success of joint ventures is not achieved without militating factors and complexity affecting the process. This study assessed the militating factors against joint venture success in the construction industry in South Africa. A quantitative research approach was adopted, using a purposive sampling technique to select participants for this study. In total, 190 copies of the questionnaire were sent out to construction stakeholders in Gauteng province, South Africa, and 185 copies of the questionnaire were retrieved. Data analysis was conducted in three stages: data reliability and validity, descriptive statistics, and exploratory factor analysis. The exploratory factor analysis (EFA) returned seven factors that provided a relevant understanding of the militating factors against joint venture success: differences in partners’ work values, ineffective regulatory frameworks, undefined goals, clashes between partners’ cultural values, economic viability, operational constraints, and conflicts of interest. This study recommends that joint venture formulation requires due diligence from partners to understand policy, organisational culture, sharing ratios, and economic viability to avoid unnecessary conflicts of interest and operational constraints. Full article

(This article belongs to the Special Issue Study on Real Estate and Housing Management)

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