Chris Eves

The long‐term impact of flooding on residential property values

Current planning schemes in Australia identify areas that are potentially flood liable. This identification of flood liable land is based on flood height levels over time. Throughout New South Wales this measure of flood affectation is determined by three classifications. These classifications also influence the development of residential property within these flood areas. Prospective purchasers are advised of this flood zoning when a full title search is carried out. However, as these properties are often located on the flood plain, and not within sight of the river, flooding can appear visually remote to the uninformed buyer. This study will analyse residential house sales in flood prone areas and compare price movements of these houses to similar houses in immediate adjoining areas that are not effected by flooding. The analysis will cover the period of 1984 to 1998. This period includes the last major floods in Sydney during 1988. This study period will determine what impact a major flood has on residential housing prices and whether this effect is on-going or decreases the longer the area is flood free.

Public awareness of “green” and “energy efficient” residential property

Purpose – The purpose of this paper is to examine the buyer awareness and acceptance of environmental and energy efficiency measures in the New Zealand residential property markets. This study aims to provide a greater understanding of consumer behaviour in the residential property market in relation to green housing issuesDesign/methodology/approach – The paper is based on an extensive survey of Christchurch real estate offices and was designed to gather data on the factors that were considered important by buyers in the residential property market. The survey was designed to allow these factors to be analysed on a socio‐economic basis and to compare buyer behaviour based on property values.Findings – The results show that regardless of income levels, buyers still consider that the most important factor in the house purchase decision is the location of the property and price. Although the awareness of green housing issues and energy efficiency in housing is growing in the residential property market, it ...

The impact of flooding on residential property buyer behaviour: an England and Australian comparison of flood affected property

Since the late 1990s‐2003, there have been a number of severe floods in areas that have not been subject to this level of flooding in earlier times. All these recent floods have resulted in two alarming factors for all property markets. This paper is based on a comprehensive survey of property professionals throughout England and Wales and a study of flood‐affected residential property in Sydney, Australia. It provides details of how exposure to flood events impacts on residential property markets and buyer behaviour associated with flood‐prone property, and will also provide some insight into the implications and possible ramifications of flooding on the construction, finance and insurance of residential property in flood‐affected areas.

Planned residential community developments: do they add value?

Purpose – An increasing trend in residential property markets is the concept of planned residential community developments, offering a range of services not available to the existing residential property markets in that given location. The purpose of this paper is to analyse a number of planned residential community developments in a major city to determine the demand for these developments and the impact they have in relation to price premiums and the overall residential property market.Design/methodology/approach – This study has identified four planned residential developments in the Sydney property market and all sale transactions in these developed estates or unit complexes have been analysed and compared to the sales transactions in the residential areas immediately adjoining the planned residential developments. These sales represent all sales transactions in the study areas and this database has enabled a comparison based on price trends, average annual capital return and price volatility.Findings...

Role of Farm Real Estate in a Globally Diversified Asset Portfolio

Purpose - This paper seeks to examine the benefits of further diversifying a global portfolio of financial assets with New Zealand farm real estate (FRE). Design/methodology/approach - The paper compares efficient sets generated with and without FRE using portfolio theory. Findings - The results show that given the predominantly negative correlation between FRE and financial assets, the risk-return tradeoffs of portfolios of financial assets can be improved significantly. The diversification benefits measured in terms of risk reduction, return enhancement, and improvement in the Sharpe performance ratios are robust under a number of FRE risk-return scenarios as well as under high and low inflationary periods. Using five and ten-year rolling periods it also finds that FRE is a consistent part of risk efficient portfolios. Consistent with the results reported in Lee and Stevenson, for the UK real estate the risk reduction benefits of diversifying with FRE are larger than the risk enhancement benefits. Practical implications - The results suggest that FRE takes on a consistent role of risk-reducer rather than a return-enhancer in a globally diversified portfolio. FRE appears to deserve more serious consideration by investment practitioners that it has been accorded in the past. Originality/value - The study examines the role of direct real estate in a globally diversified portfolio of financial assets.

Home sustainability policy and mandatory disclosure: A survey of buyer and seller participation and awareness in Qld

Sustainability Declarations were introduced by the Queensland State Government on 1 January 2010 as a mandatory disclosure measure for all dwelling sales in the State. The purpose of this paper is to assess the impact this policy decision has had in the homebuyer decision-making process in the first year since its introduction and to consider the effectiveness of the legislation in meeting its policy objectives. This quantitative research comprised a two-part process: the first stage surveyed the level of compliance by the real estate industry with the legislative requirements. Stage two comprised an online survey of Real Estate Institute of Queensland members to determine what impact the Sustainability Declaration has had on home buyer decision making and how effective the legislative mechanisms have been in achieving the policy objectives. This paper assesses the initial impact of this initiative over its first year in operation. These preliminary findings indicate a high level of compliance from the real estate industry, however results confirm that sustainability is yet to become a criterion of relevance to the majority of homebuyers in Queensland. These quantitative findings support anecdotal evidence that the objectives of the legislation to increase homebuyer awareness and relevance of sustainability issues in the home are not being achieved. Sustainability Declarations are a first step in raising homebuyer awareness of the importance of sustainability in housing. Further monitoring of this impact will be carried out over time. This is the first research undertaken to assess the impact of this new mandatory disclosure legislation in Queensland, Australia. The findings will inform policy makers and assist them to assess the effectiveness of the current legislation in achieving its policy objectives.

Diversification Benefits from New Zealand Real Estate

Abstract Although the benefits of further diversifying a portfolio of New Zealand financial assets with unsecuritised New Zealand real estate have been confirmed in previous studies, this paper examines the benefits of further diversifying a portfolio by including rural grazing property. Modern portfolio theory is used to determine the benefits of including rural property, as well as the traditional property investment assets, in a diversified investment portfolio based on New Zealand investment assets. In addition, efficient sets generated with and without real estate are compared and found significant return enhancement and risk reduction benefits of adding retail property and farm real estate to the mix. These benefits are robust even when real estate return variance is increased sixfold or when real estate returns are reduced by 20 per cent, suggesting that real estate can reasonably be expected to be a consistent part of risk efficient portfolios.

The link between infrastructure charges and housing affordability in Australia: where is the empirical evidence?

Developer paid charges or contributions are a commonly used infrastructure funding mechanism for local governments. However, developers claim that these costs are merely passed on to home buyers, with adverse effects to housing affordability. Despite a plethora of government reports and industry advocacy, there remains no empirical evidence in Australia to confirm or quantify this passing on effect to home buyers and hence no data for which governments to base policy decision upon. This paper examines the question of who really pays for urban infrastructure and the impact of infrastructure charges on housing affordability. It presents the findings of a number of international empirical studies that provide evidence that infrastructure charges do increase house prices. Based on international findings, and in the absence of any Australian research, then these findings suggest that if the international findings are transferrable, then there is empirical evidence to support the proposition that developer paid infrastructure charges are a significant contributor to increasing house prices.

The role of institutional rural property in diversified investment portfolios in NSW, Australia

Abstract The food and fuel crisis experienced in 2006 to 2008 has highlighted the importance of agricultural commodity production throughout developing and developed economies and has placed greater awareness and importance on rural property and rural property markets. These factors have led to an increased interest from major property investment institutions and property companies in the role of rural property in a mixed asset or mixed property investment portfolio. This paper will analyse rural property sales in New South Wales for the period 1990–2008, and will compare total return performance across a number of rural property sectors based on geographic location and land use type. These results show that the inclusion of rural property in an investment portfolio has benefits in relation to return and risk.

A review of efficiency measures for REITS and their specific application for Malaysian Islamic REITS

Purpose This paper aims to present a conceptual model on the efficiency of Islamic real estate investment trusts (I-REITs) available in Malaysia. The key difference between the Islamic and their conventional investment vehicle part is mainly its own Shariah framework. For instance, I-REITS must comply with the requirement of Securities Commission Act 1993 as well as the Guidelines on Islamic Real Estate Investment Trusts (Islamic REITs Guidelines). Design/methodology/approach The paper reviews and synthesises the relevant literature on the performance analysis and efficiency measurements of REITs. The paper then develops and proposes a conceptual model to measure the efficiency of Malaysian and Islamic REITs. Findings The paper identifies and examines the appropriate methods and instruments to measure the efficiency in relation to the risk and profitability of I-REITs. The efficiency measure is important for the fund managers to maximise the shareholders’ return in an investment of property portfolio as well as proposing the best way to allocate resources efficiently. Research limitations/implications This is a preliminary review of current work that identifies the issues that will be addressed in future empirical research. The authors will be undertaking this future empirical research in measuring the efficiency of Malaysian real estate investment trusts (M-REITs), particularly the I-REITs, using the non-parametric approach of data envelopment analysis. Originality/value To date, there has been very limited research on the efficiency measurement of I-REITs. The current analysis of REIT has been focused on traditional non-Islamic funds. This paper will review and discuss the current literature on efficiency measurement to determine the most appropriate approaches and methodologies for future application in performance analysis of efficiency measure for Malaysian and Islamic REITs.