Projects and Funding

CRER has attracted funding from a wide range of sources including the British Council, Housing Research Foundation, RICS, Scottish Enterprise, Scottish Homes, Slough Estates and Standard Life. Research has been focussed in areas of relevance to end users and policy makers, with projects supporting a number of research fellowships and research assistants.

Recent publications.

Current and recently completed CRER Projects

Constant-quality house price indices for Aberdeen

Funders: University of Aberdeen, College of Arts and Social Science (PhD studentship)
Duration: September 2009 – September 2012
CRER Researchers: Mr Anthony Owusu-Ansah (studentship holder), Dr Rainer Schulz and Dr Deb Roberts
Collaborators: Aberdeen Solicitor and Property Centre (ASPC)

The aim of this project is to estimate quarterly constant-quality house price indices for Aberdeen. The indices will be based on transaction prices and will consider explicitly specific characteristics of the transacted houses. The indices will be updated quarterly. This requires the development of a system of data acquisition and preparation, of statistical analysis, and of dissemination at a regular frequency.

The method used is hedonic regression, which allows the efficient modelling of large transaction data sets and takes into consideration the different characteristics of residential dwellings, such as the size, age and number of bedrooms. The resulting constant-quality indices will measure the price trend of notional, constant-quality houses over time, thus improving the transparency of Aberdeen’s property market.

For further details please contact Dr Rainer Schulz (r.schulz@abdn.ac.uk)

Depreciation of Office Investment Property in Europe

Funders: Investment Property Forum and IPF Education Trust
Duration: March 2008 – September 2009
CRER Researchers: Mr Steven Devaney
Collaborators: Professor Neil Crosby, Dr Claudia Murray
University of Reading
Mr Malcolm Frodsham, Ms Rebecca Graham
Investment Property Databank

This research aimed to identify the impact of depreciation on the investment return from office property in different European cities. More specifically, it attempted to measure the rental depreciation experienced by a sample of office buildings in each of six European locations, these being Amsterdam, Dublin, Frankfurt, London, Paris and Stockholm. The research also measured rates of capital and maintenance expenditure in order to understand the ongoing costs of restricting depreciation to a given level. To do these tasks, a methodology that was previously applied successfully to the UK property market was used.

The initial findings from the project are threefold. First, similar rates of depreciation should not be expected across different office markets owing to differences between them in the age and nature of the existing stock, and in leasing practices. Second, the results show a (weak) inverse relationship between the amount spent on buildings by their owners and the extent of rental depreciation in those assets. This was observed within several of the markets and across the set of aggregate results for the markets.

Third, there are significant difficulties in obtaining meaningful depreciation estimates for many European property markets because of the quality of time series data. In part this reflects the use of different definitions or different interpretations of the same definition when constructing rental series. The research team believes that this is the main reason why unusual results have been generated by the project and this, in turn, suggests that the application of longitudinal methods to measure depreciation rates in Europe may be unadvisable until these issues are resolved.

The report is due to be published by the end of 2009.

For further details please contact Mr Steven Devaney (s.p.devaney@abdn.ac.uk)

The Future of Built Environment Education in Scotland

Funders: RICS Scotland
Duration: October 2008 – September 2009
CRER Researchers: Mr Steven Devaney, Ms Nicky Findlay, Dr Deb Roberts
Collaborators: Professor Richard Laing and Mr Gerry Buda,
Robert Gordon University

The aim of this study is to assess the current position and future prospects for Built Environment Higher Education in Scotland, with particular reference to RICS accredited degree subjects. Areas of analysis include the supply of graduates onto both undergraduate and postgraduate programs (in terms of numbers, characteristics, and origin); the demand for, and destination of, Built Environment graduates; the demographic profile of staff teaching on Built Environment programmes; and the level of (and possible changes in) funding for both teaching and research in the Built Environment.

A combination of research methods are being used including quantitative analysis of RICS threshold data, SFC and HESA data, and qualitative analysis of findings from semi-structured interviews and focus groups with students, staff and representatives from industry. The report is due to be published in November 2009.

For further details please contact Dr Deb Roberts (deb.roberts@abdn.ac.uk)

Global Office Markets

Funders: RICE Education Trust
Duration: March 2008 to August 2009
CRER Researchers: Professor Bryan MacGregor, Professor Pat Hendershott
Collaborators: Professor Colin Lizieri (Cambridge University)

The overall aim of the project is to examine office market rental adjustment processes in major international cities using comparative econometric techniques such as a panel ECM approach. The project’s objectives are to:

(a) assemble a dataset of major city office markets variables;
(b) to clean the data to produce robust and consistent data for analysis;
(c) to model the rental adjustment processes and dynamics across cities using econometric methods that enable comparison across cities;
(d) to analyse the results and to seek explanations for differences that emerge;
(e) to draw policy implications from the findings.

The proposal combines two strands of real estate research: that which examines office market dynamics at city level using system of equation approaches to examine the interrelationship between rent, supply and demand variables; and that which examines the global real estate performance, risk and return. It is thus timely, since commercial real estate markets have become increasingly global in nature with much investment concentrated in the largest world cities.

The results have potential importance for practitioners involved in market modelling and forecasting, for those developing global real estate investment strategies and for urban planners and those concerned with the development of the built form in major cities. Its academic audience will primarily be in real estate and urban economics, although it has wider social science significance.

For further details please contact Professor Bryan MacGregor (b.d.macgregor@abdn.ac.uk)

The Treatment of Covenant Strength by the Property Industry

Funders: Investment Property Forum
Duration: March 2008 to August 2009
CRER Researchers: Professor Norman Hutchison, Ms Nicky Findlay
Collaborators: Professor Alastair Adair (University of Ulster)

The stability of the income return is one of the key features of real estate both as an investment and as a security, hence the importance of evaluating covenant strength in the risk pricing process. The level of risk premium required depends upon the interaction between the health of the economy, the property market, the sector and individual property characteristics. A survey of valuers, lenders and investors reveals clear evidence of mispricing of the systematic risk during a period of ‘irrational exuberance’. Investors appear guilty of pricing at a point in the cycle rather than taking the longer view and pricing through the cycle. This research considers what lessons can be learned from this episode.

For further details please contact Professor Norman Hutchison (n.e.hutch@abdn.ac.uk)