Centre for Real Estate Research

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
• 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)

Funders

• Investment Property Forum and IPF Education Trust

Duration

• March 2008 – September 2009

CRER Researchers

• Mr Steven Devaney

Collaborators

• Professor Neil Crosby and Dr Claudia Murray (University of Reading)
• Mr Malcolm Frodsham and 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 was published at the end of 2009.

Funders

• RICS Scotland

Duration

• October 2008 – September 2009

CRER Researchers

• Dr Deb Roberts

• 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)

Funders

• Investment Property Forum (IPF)

Duration

• April 2016 to March 2017

CRER Researchers

• Professor Norman Hutchison 
• Professor Bryan MacGregor 
• Dr Rainer Schulz
• Dr Yuan Zhao

Collaborators

• Professor Colin Lizieri (University of Cambridge)
• Nick Mansley (University of Cambridge)
• Rachel Portlock (Consultant)

This joint research by the Universities of Cambridge and Aberdeen investigated the extent to which and how hurdle rates are used in investment decisions. The study identified a range of approaches, reflecting diversity of investor type, asset and market focus, investment horizon and objectives. Findings also included that IRRs are the dominant decision metric and investment decision-making processes vary greatly in complexity and are typically adjusted to a specific project or investment, although some investors take an overall hurdle rate approach for all investments.

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

Funders

• RICE Education Trust

Duration

• March 2008 to August 2009

CRER Researchers

• Professor Bryan MacGregor

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:

1. assemble a dataset of major city office markets variables;
2. to clean the data to produce robust and consistent data for analysis;
3. to model the rental adjustment processes and dynamics across cities using econometric methods that enable comparison across cities;
4. to analyse the results and to seek explanations for differences that emerge;
5. 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)

• Investment Property Forum

• March 2008 to August 2009

CRER Researchers

• Professor Norman Hutchison

• 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)

The report has been released since the 2012Q2 by the Centre for Real Estate Research at the University of Aberdeen Business School and is based on data supplied by ASPC. In 2020Q2, the coverage of report has been extended substantially. Current and past reports can be found here:

https://www.aspc.co.uk/information/house-prices/

For further information on developing a local house price index pleases see the following link:

AHMR Methodology