Economic and Property Cycles by Adrian Wyatt

Synopsis

Investor's tactics differ dramatically but most pay attention to the timing of both purchases and the sales. Property values tend to be cyclical on long wavelengths. When the investor's timing is wrong, it may be a long wait until values recover from a fall, a fall that may precipitate the investor's demise. Conversely, understanding the cycle and anticipating its movement may, over the long-term, enable the investor to outperform investment indices.

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An examination of the contribution of the RICS Cutting Edge conference to the valuation research agenda in the UK. The Cutting Edge conference provides comprehensive coverage of research undertaken in the field of valuation.

There are two themes to this paper. The first examines the roles of the contributing institutions. The second examines the evolving changes in valuation research. There is an almost equal split between research into valuation methods and process.

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A case study of the problems involved in valuing a salt producing lake where traditional valuation thinking and practice is of limited use. In this example an attempt has been made to find the productive capacity of a lake by using Value Chain Analysis.

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The valuation of real estate where no market evidence exists or only limited market data is available is a situation that arises in both developed and emerging markets. This paper examines techniques that may be used to value interests in land and buildings where no market or only a little comparable evidence exists and argues that limited information increases the relative uncertainty over the "correct" valuation figure.

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This paper provides an overall understanding of the valuation of oil palm estates or, plantations. The oil palm plantation is a unique property type in South East Asia. It has potential as an investment since its long-term prospects are firmly founded, with the increasing importance of emerging market economies, the most important of which for the Malaysian palm oil industry are India and China.

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Real estate prices in land-scarce Singapore, particularly those of private residential vacant land, have escalated rapidly over the last 30 years as the economy enjoyed a period of almost continuous growth. The primary aim of this paper is to investigate the determinants of residential land value in Singapore.

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With major changes in the world economic environment, there is currently significant pressure on the liberalisation of movement in professional services. The International Valuation Standards Committee (IVSC) with a view to participating in world synchronisation has initiated contact with the World Trade Organisation (WTO) with a view to engaging in the dialogue on international standards applicable to the valuation of property.

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A risk approach in valuing contaminated sites is more and more accepted by valuers, real estate agents, bankers and lawyers for valuing, buying and selling, financing and contracting. This paper explores the respective roles of valuers and soil consultants in determining and measuring risk associated with soil contamination in the Netherlands.

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This paper suggests solutions for the revival of decaying and declining habitats i.e. ghost towns. It focuses on landowners becoming shareholders in enterprises and redeveloping their land to avoid wasting capital debt in land acquisition. It examines a concept of land-value being registered in "land-own" and "land-use" components to recognise the value of land use from resource to habitat and life cycle business planning to urban revival.

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This paper examines the role of valuers in their approach to the valuation of housing. The basic thrust of this paper is that valuers consider value-determining factors, i.e. factors affecting housing choice, in the same way that house purchasers consider those factors.

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This paper provides illustrations on valuation practices in Indonesia. It shows the problems that commonly face Indonesian valuers, and how they are dealing with situations in an uncertain economic climate.

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This paper examines the perennial question of whether or not appraisers, acting on behalf of mortgages, exercise independent judgement. Are appraisers influenced by mortgagees? Does the appraiser face a "moral hazard" when appraising for lending purposes?

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Privatization of state owned enterprises is often seen as a remedy for the abuse and misuse of resources by the public sector managers. This paper provides results from a study carried of the Tanzanian experience that investigated whether the asset valuation process avoided the public perception that state assets were inaccurately valued. The study analyzed sales and valuation workings from a sample of privatized state owned enterprises. The results indicated that about 70% were sold for prices far below valuation estimates. The remaining 30% were sold for prices very much closer to the valuation estimates.

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This paper overviews the recent development of the property market in Thailand and the uses of GIS in property valuation with special reference to the valuation industry in Thailand.

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This paper examines the effect of location on residential house prices and value perceptions. The methodology attempts to develop models that integrate spatial and aspatial data within a GIS environment. The research is directed to developing a working model that has a capacity to predict residential property prices and values.

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This paper is designed to stimulate thinking as to how to produce timely and more reliable estimates of changes in the values of portfolios, price indices based on a portfolio of properties, and other aggregate measures of trends in property values. It is argued that a traditional market value appraisal of each individual property may not be necessary or optimal when the objective is to value portfolios or get a leading indicator of shifts in market value at an aggregate level. It is thought more important to use a critical mass of current market data that captures systematic movements in property values. Although a traditional market value appraisal is more likely to capture the unique unsystematic characteristics of an individual property, automated valuation models using a database of valuation data may provide the best way to get real time interim updates of real estate portfolios and create more timely indices.

Synopsis

Two important options embedded in public industrial land leases managed by Jurong Town Corporation (JTC) in Singapore are the option to review land rents to prevailing market rents and options to renew for a further term. Land rents in JTC leases are reviewed every year subject to a limit on the land rent increase. The rent ceiling, which is historically lower than the prevailing market rent, gives rise to a widening gap between the contract and market rent as the lease progresses. This creates a disincentive to the lessor for not exercising the rent review option because the option is "in the money". The rent gap yields a profit rent for lessees who hold onto the leasehold interests of the industrial lands. The paper calculates the premiums for the lease renewal options under a hypothetical thirty-year lease.

Synopsis

Are real estate appraisals based on fundamentals that determine the value of the real estate or on offer price? In a game of "moral hazard" with hidden information, the paper examines the appraiser's incentives in conducting an appraisal. The authors suggest that a moral hazard problem can arise if the appraiser is rewarded with future business by a mortgagee for producing appraisals associated with successful mortgage loan applications. The authors suggest that an appraiser may be willing to overstate value if the lender so directs. The paper defines the conditions under which the moral hazard problem makes all participants better or, at least no worse off. It is argued that the subjective judgment of an appraiser may be Pareto improving. It is also argued that excessive regulation of the appraisal industry and quantitative models that constrain subjective input may reduce the gains of a real estate trade.

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This paper explores the dynamics of the spatial distribution of landed residential property values in Singapore in the 1990's. Topics covered include: spatial patterns that can be discerned in the distribution of landed property values; how property values change over time and how government intervention influences the dynamic property value surface.

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This paper examines traditional studies on retailing choice which, it is argued, rely primarily on an examination of time, distance and cost variables, This paper, encouraged by trends in sustainability and the environment and the effects on public transportation, takes a look at less conventional variables such as reliability of transportation modes and comfort. The paper, by way of principal component analysis attempts to disaggregate the travel components in the consumer's choice of a shopping centre. The paper raises the implications for valuation practice.