Measuring real estate investment performance: A European comparison of different approaches

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• Dr Steve Devaney, Henley Business School, University of Reading
• Wednesday 27 February 2013, 16:00-17:00
• Mill Lane Lecture Room 7.

If you have a question about this talk, please contact Joanna Laver.

The performance of real estate investment markets is difficult to monitor because the constituent assets are heterogeneous, are traded infrequently and do not trade through a central exchange in which prices can be observed. To address this, appraisal based indices have been developed that use the records of owners for whom buildings are regularly re-valued. These indices provide a practical solution to the measurement problem, but have been criticised for understating volatility and not capturing market turning points in a timely manner. This paper evaluates alternative ‘Transaction Linked Indices’ that are estimated using an extension of the hedonic method for index construction and with Investment Property Databank data. The two types of indices are compared to each other and to property company share price series over the period 2002-2012 in order to examine whether movements in these indices are consistent. The transaction linked series show stronger growth and sharper declines than their appraisal based counterparts over the course of the cycle in different European markets, and they are more volatile. However, they have some important limitations; for instance, only highly aggregated indicators can be published owing to low trading volumes over the period studied.

Dr Devaney joined the Henley Business School in September 2012 having previously worked as a lecturer at the University of Aberdeen Business School. His teaching and research are focused on the commercial property investment market, on which he has published academic articles as well as research reports for bodies such as the Investment Property Forum and RICS . In addition, he has research interests in the area of urban history and his doctoral research, completed in 2010, focused on the history of the City of London office market

This talk is part of the Land Economy Departmental Seminar Series series.

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• Land Economy Departmental Seminar Series
• Mill Lane Lecture Room 7

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