AsRES 2004 Conference. Abstracts

AsRES 2004 Conference Abstracts Globalization and Urban Residential Rents Ashok Deo Bardhan*, Robert H. Edelstein** and Charles Leung*** Abstract ...
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AsRES 2004 Conference Abstracts

Globalization and Urban Residential Rents Ashok Deo Bardhan*, Robert H. Edelstein** and Charles Leung***

Abstract

This paper presents evidence, for the first time, of the impact of international economic openness upon residential real estate, consistent with the well-known Balassa-Samuelson effect. A higher level of economic openness affects residential real estate by increasing demand for tradable goods and housing (the non-tradable sector), with the rents in the latter impacted disproportionately because of the relatively inelastic supply. Using principal components regression analysis and a dataset of 55 cities in different countries, our analysis explains the impact of openness on residential rents, controlling for a number of factors, such as urban wages, city size and location. Our primary statistical findings demonstrate that urban rents are positively affected by the openness of the economy, by city size and the ratio of the city to total country population.

-----------------------------------------------------------------------------------------------------* F-602, Haas School of Business, UC Berkeley; [email protected] ** F-602, Haas School of Business, UC Berkeley; [email protected]. ***Department of Economics, Chinese University of Hong Kong, Hong Kong; [email protected].

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Availability of bank credit and the residential property price level: Evidence from Singapore Edward H K Ng* and Rosaline Chow

Abstract There are two distinct residential property types in Singapore, public and private housing. Only private housing can be financed by bank loans. Public housing benefits from a government-administered mortgage scheme where the interest rate is pegged to the housing loan rate of the largest local banks. This separation of financing sources allows us to isolate the impact of bank credit availability on property price even after taking the price of credit into consideration. Ascertaining if and how much bank credit availability can affect the property price level can enable policy makers to adopt more refined measures to prevent another financial crisis arising from the vicious circle of a booming property market and credit expansion feeding into each other till both become unsustainable and collapse. A calibrated curtailing of credit availability for property purchase could be one such measure. We review models of property price determination and show how our study extends understanding in this area.

* Corresponding author. Please direct correspondence to [email protected] or School of Business, National University of Singapore, 10 Kent Ridge Crescent, Singapore 119260.

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Real Estate Indexes And Benchmark Of Performance

Cesare Ferrero* and Giacomo Morri***

Abstract This paper deals with the indexes and performance benchmarks used in the real estate market. Real estate indexes can be divided into research or performance evaluation index according to their purpose, or into direct and indirect according to the data used in their construction. After a description of different features and their comparison through a review of the literature, the attention will be on the attitude to be used as benchmark of performance for securitized and unsecuritezed real estate investments.

JEL Classification Numbers: G10, G11, G14. Key words: Real Estate, Index, Valuation, Benchmark, Performance, Mutual Funds.

* Professor Institute of Business Admnistration, Control and Finance Bocconi University **Assistant Professor, Corporate Finance and Real Estate Department SDA Bocconi University School of Management E-mail: [email protected]

* Corresponding Author: Giacomo Morri, Corporate Finance and Real Estate Department, SDA Bocconi. Via Bocconi, 8 - 20136 Milano, Italy, [email protected].

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Theory of Behavioural Finance and its Application to Property Market: A Change in Paradigm Rohit Kishore University of Western Sydney, Australia Abstract The financial theory based on Modern Portfolio Theory (Markowitz, 1952) and Capital Asset Pricing Model (Sharpe, 1964) has long shaped the way in which academics and practitioners analyse investment risks. The theory is based on the notion that investors act rationally and consider all available information in the decision-making process; hence, investment markets are efficient and reflect all available information in security prices. However, researchers have uncovered a surprisingly large amount of evidence of irrationality and repeated errors in judgement. The field of “behavioural finance” has evolved that attempts to better understand and explain how emotions and cognitive errors influence investors and the decision-making process. Shiller (1996), Kahneman (1997), Statman (2000) and Thaler (2002) and others have utilized theories of psychology and other social sciences to shed light on the inefficiency of financial markets as well as explain many stock market anomalies, bubbles and crashes. To date, much is not known about human psychology and investor irrational behaviour that influence property investors and the decision-making process. The evidence that property market is inefficient or at the best only weak-form efficient, suggests that property investors do not always adhere to rationality and are influenced by emotions. As such, it is considered that behavioural finance theories have a lot to offer towards analysing property investments. The goal of this paper is to critically analyse behavioural finance literature and make inroad towards utilising behavioural finance theories in analysing property risk and return. In this first series of papers, the author aims to utilise “fear of regret” and “prospect theory” in analysing property performance. Case studies will be used to demonstrate the ability and significance of these theories in analysing property performance.

Key words: Behavioural Finance, Market Efficiency, Limits to Arbitrage, Human Psychology and Irrational Investor Behaviour.

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Diversification In The Direct And Listed Property Investment Industry In South Africa Valmond Ghyoot

Abstract

The paper sets out the theory underlying diversification in portfolio management, and the available strategies and approaches in the direct and listed property industries. The theory is encapsulated in a checklist that is used to analyse the extent of diversification as reported by investors in direct and listed property in South Africa. The sample frame for direct property investment is the annual statistical publication by SAPIX/IPD. This covers about 60% of direct real estate investment in South Africa. The sample frame used for listed property is the annual reports of all Property Unit Trust and Property Loan Stock companies. (These are similar to REITS in the USA and Listed Property Trusts in Australia.) Content analysis is used to compare reported diversification with the theoretical requirements.

*Professor of Real Estate, School of Business Management, University of South Africa, P.O. Box 392, Pretoria 0003, South Africa.

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An Analysis of the Institutional Environment and the Determinants of the Office Investment Markets: A Comparative Study in Southeast Asia Wei CHIN (Henry) and Peter DENT Department of Real Estate and Construction, Oxford Brookes University, Oxford, OX3 0BP, U.K. Email: [email protected] Abstract Most of the research undertaken into the determinants of office investment markets has examined European and North America cities. Although Southeast Asia has been marked by high economic growth from the early 1990s to the mid-1997, it has largely been ignored. With the increasing globalisation of investments, it is very important to understand the environment of these investment markets. Before undertaking quantitative analysis for Southeast Asia, it is also important to classify those markets in terms of the progress of their development. Opportunities in both the user and investor markets will be constrained by the legal system of property rights and the quality of professional advice available to those transacting property investments, with obvious implications for property rights. Therefore, in order to understand fully the property market, it is necessary to consider the nature and evolution of the markets as well as their economic condition. Analysts usually look at economic conditions at a national or regional level, as well as the urban economies. However, the cultural framework is usually ignored. Most of the popular analytical framework is justified by the demand and supply conditions in three submarkets: user, investment and development. The first half of this paper will identify the macro-economic drivers of office rental values in South-east Asian cities over the period 1988 – 2001 by adopting the demand and supply framework. The paper uses the existing single-equation method to examine influences on office rents in five South-east Asian cities (Singapore, Hong Kong, Taipei, Kuala Lumpur and Bangkok). Real GDP, unemployment rate, floor space for office buildings, interest rate, lending rate, consumer index and service sector output will be included in examining the movements of office rental values. The second part of the paper will identify the importance and working of a range of institutional factors, and their status in each of these cities. Looking at these institutional factors in a particular circumstance may provide additional information on how the market works. This in turn, will help investors in their decision making process. Key words: Southeast Asia Office Markets, Rent, Single-Equation Model, Regression, Mature Market, Institutional Environment

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Symbolic economy: the types of urban capital from the cultural asset in Taipei in globalization context Liao Shih-Chang Abstract It is in the trends of globalization, we look for enhancing local characters and strengths of each city. The strengths are not only referred to the economic condition of cities, but also the symbolic economic ones. Culture does not only construct the style of a city, but also accumulate many capitals, which are the resources of the symbolic economy. Based on the above concept and the empirical study of Taipei, this paper intends to research into the urban capital types from its culture accumulation, and further, the effects of the symbolic economy of culture. Finally, the paper notes that continuing culture accumulation could bring further economic accumulation for city in the globalization context. Under the trends of globalization and the competition amongst cities, the government of Taipei has been thinking the competitive strengths of the city. The economic strength is not the only competitive capacity of a city. And the economic advantages are quite easily replaced by other cities. Any city could lose its place while better economic packages being offered by other cities. However, the culture resources of a city, with its essences and uniqueness, are not possibly replaceable resources of urban development. Many cities and countries have been thinking how to increase their competitiveness through the development of culture. Their culture development strategies include: 1. to establish art and culture districts to promote urban development and to shape urban images, for example, Dallas Arts District of US (Snedcof 1985), the Esplanade of Marina Bay of Singapore(see http://www.esplanade.com) etc. 2. to establish culture strategies in urban renewal policies, such as Bristol (Griffiths 1995) etc. 3. to develop culture industries to promote urban economies, for example, Paris of France (Scott 2000), L. A. of US (Scott 2000), Glasgow (Booth & Boyle 1993), and Chester Manchester of UK (Wynne 1992) etc. 4. to preserve historical buildings and settlements to develop tourism, for example, Historic Villages of Shirakawa-go and Gokayama, Historic Monuments of Ancient Kyoto of Japan ( see the UNESCO World Heritage), etc. 5. to build and level up culture policies as part of their national development policies, such as Mainland China also incorporated culture industries into its national development plan in the 15th Annual Central Committee Meeting of Chinese Communist Party in the October of 2002(Chian & Hsieh 2002). Therefore, cultural assets and its characters are important resources of urban through the development in globalization context. This paper sees culture as an important resource of economic production of urban, and aims at revealing the following questions: 1. What are types of urban capital from the cultural asset? 2. How did these types of urban capital transform into economic production? 3. In what types of capital are presented in the symbolic economy in urban? 4. How is the current condition of the development in Taipei? Keywords: urban capital, symbolic economy, culture industry, globalization context. * Contact address: Email: Liao Shih-Chang

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The Cultivate Form of Property Management Professional in Main-land China Zhang zuoxiang* Cao baishong He chuan Han chao Abstract This thesis mainly introduces the present statue of the development procedure of Property Management and professional staffs, what is more, it analyses the basic law of the operation both in main-land China and abroad. Based on the achievements of Beijing Forestry University and other concerning institutions and organizations, on the subject of the cultivate form of professional staffs, retaining the factors of special environment in our country, and learning from better ways of the cultivate forms from abroad, we present the cultivate form of Property Management professional in main-land China.

Key words: Property Management, Professional Cultivation, Cultivate Form

* Zhang zuoxiang, Lecturer of the Department of Property Management, Beijing Forestry University, Hai Dian district, Beijing 100083, China, Email:[email protected] Cao baishong, Postgraduate Student, Department of Property Management Beijing Forestry University, Beijing, China. He chuan, Postgraduate Student, Department of Property Management Beijing Forestry University, Beijing, China. Han chao, Professor and head of the Department of Property Management, Beijing Forestry University, Beijing, China.

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Land Administration And Agrarian Land Reform In Bangladesh Agenda: Sustainability And Poverty Reduction

Shariful Alam Chowdhury* Prof Golam Rahman Mongure Alam Pramanik†

Abstract The population of Bangladesh contains the largest proportion of landless poor in South Asia. Many of the country’s development problems stem from land-related issues – its high population density coupled with an agrarian economy, exploitative land tenancy, ineffectual land laws and corrupt and bureaucratic administration. These problems are compounded by the changes that the globalization of economy and international market forces have effected on land use patterns and traditional farming methods throughout the country. Land Reform has been one of the most debated topics in economics over the last fifty years. Indeed the works of Lipton and Sobhan suggest something of a resurgence of interest; advocacy of land reform appears to continue unabated, whether by third world scholars (Sobhan, 1994), third world journals (EPW, 1994), development periodicals (Lipton, 1994) or expert reviews of the literature (Binswanger and Deininger, 1997). After independence however, there has been no comprehensive revision of land laws, administration or management to benefit the landless poor in Bangladesh. Throughout the 1970s and 80s the land reform agenda was almost completely missing from the political and academic arena. Since late 80s, however, in line with the international development agenda, new land reform initiatives began in Bangladesh.

Key words: Land Reform, Land Administrative, Legal Reform etc.

*Research Assistant, Delta Planners and Builders Ltd., Dhaka, Bangladesh & Masters of Urban and Regional Planning, MURP, Department of Urban and Regional Planning, Bangladesh University of Engineering and Technology (BUET), Dhaka – 1000.E-mail: [email protected]

*

Research Assistant, Delta Planners and Builders Ltd., Dhaka, Bangladesh & Masters of Urban and Regional Planning, MURP, Department of Urban and Regional Planning, Bangladesh University of Engineering and Technology (BUET), Dhaka – 1000.E-mail: [email protected] † Teaching Assistant & Masters of Urban and Regional Planning, MURP, Department of Urban and Regional Planning, Bangladesh University of Engineering and Technology (BUET), Dhaka – 1000. E-mail: [email protected]

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A Study on the Termination Behavior of Residential Mortgages in Taiwan Tsoyu Calvin Lin* Abstract Traditionally, mortgage default or prepayment behaviors are mostly studied individually through non-competing risks models in Taiwan, which have been criticized as misleading. This study is the first to construct a unified model to explore the mortgage prepayment and default behavior in Taiwan. The competing risk model (CRM) is employed to investigate factors influencing mortgage termination. Empirical results show that such elements of mortgage contracts as loan to value (LTV) ratio, payment to income (PTI) ratio, and regional variation are crucial elements to mortgage termination. Some macro economic factors, such as unemployment and divorce rates, are significant to mortgage default. Furthermore, two option variables, i.e., changes in interest rates and housing prices, are critical to mortgage prepayment and default, respectively.

Key words: mortgage termination, default, prepayment, competing risks model JEL classification: G21; R51

* Associate Professor, Dept. of Public Finance and Taxation, National Taichung Institute of Technology, Taiwan. Add.: #129, Sec. 3, San-Min Rd., Taichung, 404, Taiwan. Tel: 886-4-2219-6173. Fax: 886-4-2219-6171. E-mail: [email protected].

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Corporate Housing : An analytical study of the Current Need and Tracking the American Trends Joe Payyapilly M.Arch, M.U.D. (UCD) College of Architecture and Planning, University of Colorado at Denver, USA. Email [email protected] Phone 001-303-564-0237 Abstract This paper is intended to understand and explore the growing need and also analyze the current trends and prospects of Corporate housing, as an appropriate emerging need of the hour due to the increase in the rate of globalisation. This paper would be based on various case studies of the existing corporate housing in America as well as Asia, and this is due to the movement of jobs overseas from America to the Asian countries, which infact results in the adoption of Western standards of housing for the corporate executives who are always on the move. This study hopes to evaluate the appropriateness of corporate housing as an alternative approach to the hospitality industry. The paper would probe into the qualitative aspects of the corporate executives’ needs as in terms of amenities and utilities are concerned which in turn could show a competitive face-up towards the rival hotel industry. Corporate housing is a considered to be a highly evolved product of economics and exchange in civilizations utilizing the epitome of design elements for one’s housing needs, be it singular or collectively, either for temporary or for permanent stay. Relocation being a major problem of the corporate executives, though this sector of the society is not many in number and falls at the topmost layer of the economic pyramid and they form the engine-drivers of an economy and the strategical evaluation of their needs help us to determine the design strategies involved in corporate housing planning. There would also be a brief look into the traditional limitations in terms of design and its various components due to the various effects of regionalism.

Key words: Growing need, current trends, globalisation, alternative approach qualitative aspects, economics, relocation, engine-drivers, strategical evaluation, traditional limitations, regionalism.

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The Formulation of An Integrated Land Policy in Malaysia – Indigenous Land Holding Revisited

Ismail Omar* Nik Mohd Zain bin Haji Nik Yusof

Abstract The paper seeks to evaluate the need for an integrated land policy to be formulated in Malaysia. As a set of rules to administer land, land policy sets to consider various factors for implementation including the existence and issues on indigenous lands. At present, the land policy in Malaysia is in the forms of various laws, acts and guidelines. It is not an integrated form to govern the land administration and management in the country. Therefore, an effort is being undertaken to formulate a comprehensive land policy in the country. With reference to indigenous land interests, there are institutional factors that have to be considered in the formulation of the land policy. Data on the rules of indigenous land and the way it affects agents’ decision in the land administration and management is to be collected from landowners of indigenous land in Kuala Lumpur for analysis. The main finding is that there are implications of indigenous land rules on the formulation of a comprehensive land policy. In the end, the paper shows ways to improve and inculcate the requirements and, hence, repositioning of the indigenous land within the formulation of a comprehensive land policy in the Malaysia. Key words – land policy, indigenous land, implications, Kuala Lumpur.

* Centre for Real Estate Studies (CRES), Faculty of Engineering and Geoinformation Sciences, Universiti Teknologi Malaysia, 81310, Johor Bahru, Malaysia. Ph: 006 07 5530805 Fax: 006 07 5566 163 E-mail: [email protected]

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Sustainability in Urban Redevelopment : Incorporating Social Impact Assessment (SIA) in Tourism Development In Malaysia

Ismail Omar* Kuan Chow Sheng

Abstract To sustain the urban developments within the social dimension, concerns about the social impacts is substantially needed. In actual fact, tourism can and does bring about socioeconomic and socio-cultural changes to the local residents. Thus, pertaining to the above, this study is done to identify the specific types of tourism’s social impacts and to review the concept of Social Impact Assessment’s (SIA) elements, as well as studying the applicability of SIA for sustainable tourism development. This study encourages that the elements of SIA to be applied in evaluating these tourism impacts, existing or potential, which can then provide a basis for determining appropriate sustainable tourism development to prevent or remedy negative social impacts and reinforce the positive socio-cultural and socio-economic impacts of tourism development. The methodology used in achieving the objectives of this study is through understanding of the theoretical framework, data collection via questionnaires (for local residents, local tourists and international tourists) and through face-to-face interview with tourism-related parties. The case study chosen is the historical city of Malacca Town Centre. These data collected in the case study area has been analyzed using the qualitative and descriptive method in order to extract the findings of this study as well as to accomplish the study’s objectives. The main finding of this study is that various types of social impacts are indeed existing in the case study and therefore, the tourism-related agencies, either public or private sectors, need to do something in tackling these social impacts which will probably happened permanently or temporarily. But what is the most suitable “tool” in predicting or assessing these social impacts professionally in sustaining tourism industry? Thus, this study has enlightened the applicability of SIA for sustainable tourism development. Key words: Social Impact Assessment (SIA) – Tourism – Urban Development – Sustainability - Malaysia

* Centre for Real Estate Studies (CRES), Faculty of Engineering and Geoinformation Sciences, Universiti Teknologi Malaysia, 81310, Johor Bahru, Malaysia. Ph: 006 07 5530805 Fax: 006 07 5566 163 E-mail: [email protected]

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An overview of the plan for the New Administrative Capital in Korea Tae-Ug, Rho Abstract

This is an outline of the current plan for the New Administrative Capital in Korea. Firstly, I show the historical background, basic urban concept and action plan suggested by the Presidential Committee on Administrative Capital Relocation. Secondly, I describe the selection and evaluation process of four candidate sites. Finally, I summarize several debates on this issue, and anticipate its future.

Department of Real Estate Studies, Kangnam University, Gigal-Ri San 6-2, Kiheung-Eup Yongin-Si, Kyunggi-Do, Korea, Tel +82-31-280-3724, Fax +82-31-280-3711 Email: [email protected]

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An Investigation to the House Price Mystery in Taiwan Form The Property Tax Perspective Chien-Wen Peng∗ Sun-Tien Wu∗∗ Shyang Hua Wu∗∗∗ Chien-Wen Peng Sun-Tien Wu [email protected] Abstract The average rent multiplier in Taiwan is about 3 times as large as that of most western countries, indicating that the house price in Taiwan has been extraordinary high on average. To this mystery, many have believed that it has to do with people’s high expectation with regard to house price appreciation in the market but hardly have any proof. Some, on the other, have conjectured that it has to do with the extraordinary low effective rate of property tax occurred, yet still fail to provide any solid evidence for it. In this study, we try to explore the mystery from the tax prospective to provide the needy evidence. To the end, we would lay the theoretical framework of property tax capitalization first and then construct a model to estimate the property value along the theoretical framework. It is hoped that the mysterious relationship between the extraordinary high house price and the low effective property tax can be unveiled with the empirical work in plan. Key words: Property Tax Capitalization, House Price, Rent Multiplier

Contact author: Chien-Wen Peng



Department of Real Estate and Built Environment, National Taipei University , Address:67, Sec. 3, Ming-shen E. Rd., Taipei, 104 Taiwan, Tel: +886-2-500-9151, Fax: +886-2507-4266, E-mail: [email protected] ∗∗ Department of Economic, National Taipei University, Address:67, Sec. 3, Ming-shen E. Rd., Taipei, 104 Taiwan, Tel: +886-2-500-9129, Fax: +886-2508-0499,E-mail: [email protected] ∗∗∗ Department of Financial and Banking, Ching Yun Technology University

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Theoretical and Empirical Model for Private Homes in Sweden for the period 1970Q1-2005Q4 Bharat Barot and Alfred Kanis [email protected] and [email protected]

Abstract The main objective of this paper is to present a theoretical structural short-run forecasting model for housing prices and housing investment to be used at the National Institute of Economic Research Sweden at every forecasting round. It must be pointed out that it can also be used for medium term forecasting by calibrating the estimated coefficients of the model. The model has also some interesting policy implications. We refrain from all this aspects and concentrate and focus on using the stock-flow models as a forecasting model on the short-run (2 - 3) years. On the demand side the real house prices is expressed as a function of income, the stock of dwellings, real wealth stock which is limited to financial assets, the real user cost of capital (reflected in the nominal and real interest rates) and the household debt variable. The demographic variable is the cohort of 30-34, and the total population of Sweden. The supply side is based on the famous q-theory of Tobin (1969). The framework of analysis is conducted using the Error Correction Model (ECM). The projections on house prices and housing investment outlined below are conditional on assumptions for the future course of explanatory variables whose development is not explained within the model: disposable income, the consumption deflator, interest rates, and the marginal tax rate etc. The forecast on the exogenous variables is taken from NIER, December forecasts 2003. An ad-hoc model for household debt gives the following forecasts for the stock of household debt, 2003: 5.6%, 2004: 6.5% and finally 3.7% for the year 2005. The simultaneous model solution allowing for interaction between the supply and demand sides gives the following forecasts for real house prices, 2003: 5.0%, 2004: 4.5% and 2005: 1.8%. The forecasts for housing investment are as follows: 2003: 5.8%, 2004:5.4% and 2005: 1.6%. The results indicate that as the growth rate in household debt declines successively for the period 2003-2005 tends to pull down real house prices which in turn pulls down housing investment. Key words: Theory, empirics, Error correction model, integration, co-integration, Tobin’s q, short - term forecasts

National Institute of Economic Research, P.O. Box 3116, SE-10362 Stockholm, Sweden and Department of Economics, Stockholm, Sweden.

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An Empirical Analysis of Home Equity Loan and Line Performance: Implications for Risk-Based Capital Requirements Sumit Agarwal*, Brent W. Ambrose**, Souphala Chomsisengphet and Chunlin Liu

Abstract One of the key features of the Basel II Accord is the alignment of bank minimum capital requirements with the economic risks associated with the bank’s investment. Given the growth in home equity lending during the 1990s, it is imperative that lenders and regulators understand the risks associated with this segment of the residential mortgage market. This paper addresses this need through analysis of a unique panel data set of over 135,000 homeowners with second mortgages. Our analysis indicates that significant differences exist in the prepayment and default probabilities of home equity loans and lines. We find that households with equity loans are relatively more sensitive to interest savings. On the other hand, households with equity lines are more sensitive to appreciation in property value.

JEL Classification: D100, E210, and G210 Key words: Home Equity Loans and Lines, Prepayment, Capital Regulations

*FleetBoston Financial, Mail Stop RI DE 03306C, 111 Westminster Street, Providence, RI 02903 401-278-2927 [email protected] **Kentucky Real Estate Professor and Professor of Finance Gatton College of Business and Economics, University of Kentucky, Lexington, KY 40506-0034 859-257-7726, [email protected] ***Office of Policy Analysis and Research, Office of Federal Housing Enterprise ****Oversight, 1700 G Street, NW, Washington, D.C. 20552 202-414-6378, [email protected] ****FleetBoston Financial, Mail Stop RI DE 03306C, 111 Westminster Street Providence, RI 02903 401-278-3202, [email protected]

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The Dynamics of Reconstruction of Residential Buildings and Adjustment of Household Economic Behaviors after the 921 Earthquake Chu-Chia Lin* and Chien-Liang Chen** Abstract 921 earthquake invokes enormous attentions on the consequences of impacts and recovery of the quake from overall academic fields. Most of these quake-related studies are disaster-release policy oriented, or case studies on recovery process of specific area from certain aspects. Analyses focusing on the general phenomenon of residential housing re-construction dynamics and the changes of household economic behavior in accordance with the quake, however, are still lack of enough attention. The main purpose of this study is to depict the impact from and response to 921 earthquake of the victim households through their reconstruction of housing and adjustment of household behavior. Due to the insufficiency of reliable official data of housing re-built after the quake, on the one hand we retrieve the time series statistics of housing re-construction by comprehensively reviewing local and county government records over the quake area. On the other hand, we employ the housing tax records released by the Ministry of Finance to check the number of quake-affected housing, so as well provide a benchmark for contrast with the local government data. We can therefore justify the accomplishment of housing recovery after the quake by contrasting the two micro datasets in detail. In consequence, we examine the transitions of socio-economic phenomenon of the victim households. We use Survey of Family Income and Expenditure household survey data to analyze the changing patterns of income, consumption and saving behaviors of the household inter- and intra-regionally within a time-series aspect. Preliminary evidences indicate that housing reconstructing started right after the quake, and reached peak within a year. Suburban and rural residences show various patterns of reconstruction in terms of time schedule, scale of loans, and percentage of rebuilt/purchase. Regarding the economic behaviors of victim households, income level actually raised after the quake within a short period of time, and then declined in the second year. Engel phenomenon were documented that share of staple purchase increased when income decreased. While increased saving rates with deteriorated income might partly reflect more risk averse attitude of the households after the disaster. Findings of this study are expected to provide useful references to re-examine the effectiveness of reconstruction policy, and to provide suggestion for future policies. Key words: 921 earthquake, housing, economic behavior, household. *Professor, National Chengchi University, Taipei, Taiwan. E-mail: [email protected] **Associate Professor, National Chi-Nan University, Nantao, Taiwan. E-mail: [email protected]

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Tobin’s Q and Housing Investment: The Case of Taiwan Chu-Chia Lin1* Abstract Tobin (1969) proposed the famous Q ratio hypothesis that the optimal amount of investment for a certain firm is determined by the ratio of market value of current capital and its replacement cost. Since housing investment is an important investment behavior both for housing constructors and for households, will the housing investment behavior follow Tobin’s Q hypotheses? It is more than an academic interesting question to answer. If the answer is correct, then we could apply this theory to explain the housing investment behavior, and also to explain the accumulation process of housing stock in Taiwan. The problem is that it is difficult to compute the market value and its replacement cost of housing units since every housing unit has different attributes. Therefore, one has to standardize the housing unit before he wants to calculate a certain unit’s market value and its replacement cost. Restricting by the available data set, the empirical study of Tobin’s Q in housing market even in international research is rare, until recent years. In Taiwan, the literature related to Tobin’s Q ratio is also very little. There are a few articles applying Tobin’s Q in financial market, but not much in other fields, not mentioned in housing market in Taiwan. The purpose of this study is to apply Tobin’s Q theory to Taiwan’s housing market. More specifically, we like to test whether Tobin’s Q has a significant effect on housing investment in Taiwan. Furthermore, we also like to test the relation of housing price and the quantity of housing stock, by using Tobin’s Q. In the empirical study of this paper, we will use the standardized price of pre-sale housing units as the estimated market value while the prices of the existing housing units as replacement cost. And thus we could compute a time-series date of the Tobin’s Q ratio in Taiwan. On the other hand, we could use the total amount of housing start, total value of pre-sale housing units, and total amount of finished housing units as the amount of housing investment in Taiwan. Then, applying a standard time-series analysis, we could test the effect of Tobin’s Q on the amount of investment. Moreover, we could also test the causality of Tobin’s Q ratio and the total amount of investment to check the relationship between housing price and housing stock in Taiwan. Key words: Tobin’s Q, housing investment

*

Department of Economics, National Chengchi University. Address: 64,Chi-nan Rd. Sec. 2, Taipei 116, Taiwan. E-mail:[email protected]. Fax: 886-2-29387462 Tel: 886-2-29387462

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The time-series study of housing price index of Shanghai

Long Fenjie and Wu Gongliang Email: [email protected]

Abstract The paper analyses the monthly housing price index of Shanghai from Juan 1999 to Oct 2003 by the ARCH models based on the ADL models to better explain the short term price volatility. Compared with some traditional time series forecasting methods, ARCH models are better at analysing and forecasting the volatility and trend of the index, which provide an efficient approach for us to comprehend the market movements.

Key words: housing price index, volatility, ARCH

Long Fenjie, Associate Professor, Institute of Real Estate Studies, Department of Construction Management, Vice Director, Construction and Campus Planning Office Tsinghua University. He Shanheng Building, Tsinghua University,Beijing, 100084, China Tel:8610-62795112,62784640 Fax:8610-62788678 E-mail:[email protected] Wu Gongliang (contact author) Graduate of Institute of Real Estate Studies, Department of Construction Management, He Shanheng Building, Tsinghua University,Beijing, 100084, China Tel:8610-62775963 E-mail:[email protected]

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The Pricing of Purchase Discount Options in Taiwanese Housing Market Yao-Min Chiang*, Chia-Hsin Huang, Jay Sa-Aadu

Abstract In this paper, we design a house purchase discount option to promote house sale. We are also able to provide the closed-form pricing formula for these new options. This new designed discount option is especially suitable for using in a house pre-sale system. This option can help to promote house sale and also help to stabilize the developer’s stock price. The purchase discount options are function of two dynamic price process of house and stock. We follow Asian option pricing approach to derive the pricing formula. This kind of purchase discount options has potential for wide application.

Key words: house sale, discount, options, pricing model, closed-form solution.

Department of Finance, National Chengchi University, Taiwan Email: [email protected] Department of Finance, National Yunlin University of Science and Technology, Taiwan Email: [email protected] Department of Finance, University of Iowa, Iowa City, IA 52242 Email: [email protected]

We are grateful to Son-Nan Chen for his valuable comments.

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The Distribution of Household Income and Housing Consumption between Tenure in Taiwan Bor-Ming Hsieh * Abstract The paper analyses the changes in the distribution of Taiwanese household income and housing expenditure between tenure during the 1990s, taking account of different attitudes of inequality through use of Gini-coefficient and Atkinson’s inequality index. Compared to Gini-coefficeint, the Atkinson index allows researchers to make their social value judgments explicit and to give increased weight to inequality at the bottom end of the distribution, which is an important index for social welfare. This paper employs more than 13,000 Taiwanese family observations from the Survey of Family Income and Expenditure in 1990 and 2000. The data includes rich information on income, housing data and a rigorous imputation of housing consumption based on imputed market rents. The results show that there exists a significant income inequality between tenure in Taiwan during the 1990s. Mortgaged owners were concentrated in upper income levels while private renters were relatively concentrated in lower income levels. Moreover, it was found that the inequality of housing consumption distribution between tenure was smaller than that of income distribution. This implies that gap of housing quality between tenure is unlikely to be as big as income inequality. Some policy implications are also discussed in the concluding remark.

Key words: income inequality, Gini-coefficient, Atkinson inequality index.

* Assistant Professor, Department of Land Management and Development Chang Jung Christian University, 396 Chang Jung Road, Section 1 Kway Jen, Tainan, 711 Taiwan Tel: 886 6 278 5123 ext. 2322 Fax: 886 6 278 5902 [email protected]

47

Elementary Vs Secondary Schools: Parental Valuation of School Quality

Tsur Somerville & John Ries Sauder School of Business – UBC Abstract While there is a broad social consensus in favour of quality education, the value the public attaches to the public provision is less clear. Urban economists have used the premium households are willing to pay to locate in certain school districts as a way to measure this value of education. This paper takes advantage of a natural experiment afforded by the Vancouver School Board’s adjustment to both primary and secondary school boundaries for the 12 secondary and 47 elementary schools in the city. The large number of schools in Vancouver, Vancouver’s characteristics, and the number of affected boundary changes allow us to make distinct contributions to the literature. First, the repeat sales approach to estimating house price indexes allows us to implicitly control for differences across units in both neighbourhood amenities and unit structure characteristics. Second, we compare the valuations of quality separately for elementary and secondary schools. Third, the richness of our data allow us to conduct robustness tests across different measures of school quality, different techniques for estimating house price movements, and to compare the estimated values under different valuation methodologies, such as a standard hedonic cross-section, Black ‘s (1999) use of houses on either side of a school catchment boundary and Figlio and Lucas’s (2000) neighbourhood fixed effects approach. We find that results are quite sensitive to the specification of quality and to the level of aggregation for price index analysis. Surprisingly, we find that while secondary school quality matters, the evidence for elementary school is not statically significant.

48

Real Property Market In Beijing 2003 Mao Daqing, Capitaland Group, Singapore Ge Zhengming, Tongji University, P.R.China Email: [email protected] Abstract From the beginning of 2001, real property business has been in another peak time of development in Beijing. Since 2003, Beijing real property market has kept a steady growth in a stable pace. The capital investment in Beijing real property market reached RMB 120 billion, which represents a 21.5% increase over last year. The average price of commercial property is RMB5,700/sq.m, remaining the same level of 2002. Real property business makes great contribution to urban development of Beijing. During 2002 and 2003, averagely 5.63% of GDP in Beijing was made by newly increased value of real property in Beijing. From investment perspective, the capital investment to real property development in Beijing represents averagely a 53.5% contribution to the GDP increased in Beijing during the same period. There are some basic characteristics of real property market in Beijing: 1 2 3 4 5

6 7 8 9

There is a huge and booming market in rapid growth; There exists a mutually beneficiary correlation between the continuing economic growth and the rapidly development of real property business in Beijing; Capital investment in real property business is further encouraged by rapid development in city construction; Structures of market, products and consumption are relatively in good shape; Capital investment in property development maintains a strong momentum, so funds can be raised through various channels and more capital continuingly pour in; Both supply and demand are strong, and the increase rate of sales overtook that of construction completion for the first time in three years; The supply of property of sub-categories witnessed a comprehensive and substantial growth; The increased size of efficiency housing projects (for low income families) laid a solid foundation for stable real property market in Beijing; and The housing price in 2003 is higher than that of last year, signaling a strong indication of future appreciation of commercial property.

The uncertainty of Beijing real property business remains in terms of relatively short of supply while the potential of demand remains strong. Therefore, real property still has quite room to develop and the future of market remains promising. The issues concerning developers most are the huge pressure in land market and lack of effective mechanism and policy for micro control in real property development activities.

49

Wasted Opportunities - Corporate Property Investment in Australia Clive Warren

Abstract

Many Australian companies still do not adequately recognise or manage the value of their corporate real estate. The total cost of office accommodation in Australia is identified and the value of wasted space quantified. Some $550 million could be added to business’ bottom line if new office techniques and basic strategic asset management planning were to be adopted. The consequences on the future need for office development may also be affected by these developing facilities management techniques.

Key words; Corporate real estate, property performance, resource sustainability, Australia

50

Housing Market In Malaysia: Is The Price Right?

Aminah Md Yusof (PhD) Faculty of Civil Engineering, Universiti Teknologi Malaysia, Johor Bahru, Malaysia* Email: [email protected]

Abstract

The studies on house price have been carried out on different level of emphasis. Some studies emphasised on the socio-aspect of housing which is particularly true in most developing countries. The discussion and policy formulation on addressing housing the nation originated from shortage in decent space for habitation. The agenda seems to attract more social scientist around the globe. Whilst some address socio-aspect of housing, the other half are looking into the economic dimension of housing. This is due to the fact that housing is not longer treated as basic need but as an investment. The evolution of owner-occupation to holding residential units as investment (for income generation) calls for different approach to housing market analysis. The works on house price have been carried out in different locations around the globe but for exploring three main areas: price movement, price determination and price variation. The dynamic house price discovery has urges the application of more systematic and defendable analysis of housing market. The different level of success in incorporating statistical techniques such as regression have been demonstrated in number of works such as Birch and Sinderman (2003), Chin and Chau (2003), Griliches and Rosen (1961, 1971 & 1974) and Smith (1974). Nonetheless, the usage of the techniques is considered as low despite it long history backed in 1940s. The application of such technique may be constrained by data problems as well as lack of necessary analysis skill. These statistical techniques have been successfully explained house price phenomenon but little effort has been made to move toward similar pattern in Malaysia. This paper will present a preliminary analysis of house price discovery in Malaysia. A review of price discovery will provide a theoretical framework of paper. Variation in prices for similar type of houses in different location in Malaysia will be discussed hence to provide early indication of price discovery in this country. The study hence will form a platform for further house price modelling in Malaysia.

* The paper presents a preliminary work of research entitle Malaysian Housing Investment Information: Price Modelling. The project is fully funded by National Property Research Coordinator, Ministry of Finance, Malaysia.

51

A Measure of the Institutional Real Estate Portfolio Managers’ Performance in Nigeria OLALEYE Abel, M.Sc., ANIVS, RSV, (Contact Author)* ALUKO Bioye Tajudeen, PhD, ANIVS, RSV, AMIDU Abdul-Rasheed

Abstract

Against the background of the increasing sophistication of property investors in the Nigerian property market and the need to consider a new dimension of diversification strategies based on managers and property type, the study establishes the extent to which managers’ skills at selecting property, the structure as well as asset management can better the performance of a property portfolio. Disaggregating the performance of three institutional property portfolios in the country into benchmark, structure and stock components, the paper examines the current structure of the institutional portfolios and analyses the performance level of each of the managers in terms of their portfolio structure, stock selection and asset management. The paper also uses the differential return measure as developed by Elton and Gruber (1981) and calculates the tracking error of the portfolios in analysing recent performances of the managers. The preliminary analysis of the study suggests that the sampled managers appears to be poor at structure, stock selection and asset management and thus their current practice (skills) cannot cope with the sophistication which today’s property market/investors demands.

Key words: Portfolio Analysis, Managers Performance

* Lecturer, Department of Estate Management, Obafemi Awolowo University, Ile-Ife, Nigeria. Email: Abel Olaleye ** Acting Head, Department of Estate Management, Obafemi Awolowo University, Ile-Ife, Nigeria. *** Graduate Assistant, Department of Estate Management, Obafemi Awolowo University, Ile-Ife, Nigeria.

52

Land reform and land development in Shanghai: Pudong development as a case study Yawei Chen MSc PhD Candidate Department of Real estate and Housing, Faculty of Architecture, Delft University of Technology, The Netherlands

Abstract Since 1978 China started its reform and open door policy to enliven the economy and integrate with the outside world. Different from the Shock Therapy approach implemented by the former Eastern European countries, China adopts a more pragmatic approach towards its economic development to reduce dramatic social changes. The gradualism approach and dual-track reform strategies are being used not only in economic restructuring but also in land reform and the development of real estate market. Can the approaches that Chinese take realise the aim of the land reform in rationalizing land allocation, enhancing the efficient and effectiveness of land management, and better coordinating urban and rural development? This article tries to answer this question by focusing on how the process is implemented at local level in Shanghai and what are the following social-economic consequences the locals face. This paper describes how the national land reform affects the local urban development in Shanghai and how the land market is developed at local level by examining Pudong development - a mega transformation project in Shanghai. The research reveals that the local government has adopted an active land policy and is actively involved in land development. Many new mechanisms were experimented to facilitate the development of Pudong. The change of land policy and the land development brings both positive as well as negative social-economic consequences. On the positive side, the emerging of the land market has increased the government revenue and enables the government to invest heavily in infrastructure and other public facilities; on the negative side, problems such as relocation conflicts, employment of farmers who lost their land and possible government corruption have emerged. How the policies can be amended will be discussed in the end. Key words: Urban land policy, reform, land development, land banking, relocation Address: Postbus 5043, 2600 GA Delft, Berlageweg 1, 2628CR Delft, The Nederlands Tel: +31 15 2781272 Fax: +31 15-2783171 Email: [email protected]

53

Stickiness of Property Rental Rates and Developers' Games Rose Neng LAI, Ko WANG and Yuqing ZHOU ∗

Abstract In the general equilibrium framework, property rental rates should be adjusted to a level that eliminates all vacancy. However, several researches’ proposal that the cause of volatile rental market cycles is due to developers’ reluctance to reduce rental rates to eliminate excess supply implies that rental rates are normally sticky. This paper attempts to provide explanations to such situation using developers’ construction strategic game. We show that when existing inventory and vacancy are considered, the rental rate that eliminates all supply is actually sub-optimal. Specifically, developers will put rental rate, which they will realize upon development completion (second stage), into consideration when they decide when to exercise the option to build (first stage). The consequence of this two-stage model is that developers will keep on building and collude to a sticky rent.

∗ Rose Neng Lai (Contact Author) is Assistant Professor, Faculty of Business Administration, University of Macau, Taipa, Macao, China. e-mail: [email protected]. Tel. No.: (853)-397-4744, Fax. No.: (853)-838-320. Ko Wang is Professor, Department of Finance, California State University-Fullerton, e-mail: [email protected]. Yuqing Zhou is Associate Professor, Department of Finance, The Chinese University of Hong Kong, HKSAR, China; and Visiting Associate Professor, Information and Resource Program, Columbia University, e-mail: [email protected].

54

Impact of the Location Factors upon the Sydney Industrial Property Market

Jinu Kim*

Abstract The theoretical framework of the study predicts that the way in which the values of industrial rents and lands perform is a function of economics and location factors. From 1976 to 2003, the performance of industrial rental and land values in the Sydney region was analysed in terms of the economic situation and the location aspects. The paper investigates the impact of the location factors upon the rental and land values in the Sydney industrial property market, using a least-square regression analysis.

Key words: Industrial property market, rents, land values, location factors

*School of the Built Environment, The University of New South Wales, UNSW, SYDNEY 2052 Australia, Telephone: +61 2 9385-5237, Fax: +61 2 9385-4507 Email: [email protected]

55

The outlook of mortgage-backed securitization in China: A feasibility study and a proposed framework

LONG Fenjie and ZHANG Ning *

Abstract Real estate securitization is one of the hot academic topics in recent times. After its success in the United States, several developed countries and regions, such as the United Kingdom, Singapore and Hong Kong, have all launched their specific MBS. With an annual growth in real estate investment at 20% around, it is no doubt that China is one of the world’s largest real estate developing countries. In this very process, the total amount of mortgages is increasing year by year and might cause some problems in the near future. This paper primarily deals with the following issues. What forces in markets are driving the mortgage-backed securitization process? What factors are still hampering securitization? How will the benefits of securitization allocate among the market participators? What sorts of mortgages should be placed in mortgage pools? According to the current conditions, what securities should we choose to launch? How could the risks be controlled? After the above analysis, we will provide a basic and theoretic framework of securitization in China.

Contact Information: Zhang Ning, Department of Construction Management, Institute of Real Estate Studies Tsinghua University, Beijing, 100084, China. Tel: 8610 82841245. Email: [email protected] or [email protected]

56

The Measurement of Operating Performance for Real Estate Investment Trusts in Taiwan, Net Income vs. Funds From Operations Ming-Chi Chen* and Gary Chen Abstract Real Estate Investment Trusts (REITs) are one of the few publicly traded sectors that use an alternative form of performance measurement. The US main industry trade association, the National Association of Real Estate Investment Trusts (NAREIT) has suggested that Net Income is not a meaningful measure of operating performance for income-producing real estate. With REITs, financial performance is universally determined by funds from operations, or FFO, which adds back depreciation when calculating cash flow. NAREIT claims that FFO is a better measure of operating performance because historical cost depreciation is inappropriate for income-producing real estate and it is not correlated with changes in the value of these assets. Although the industry believe FFO provides better information than Net Income, the Security Exchange Committee (SEC) has historically not favored setting up unique accounting rules and measures for specific industries. Real Estate Securitization has been a hot topic in Taiwan for many years. Since the Executive Yuan made the draft of the Real Estate Securtizaion Act, Real Estate Securitizaion has been gaining increasing attention from financial industry in Taiwan. Under the Taiwan Real Estate Securitization Act, professional real estate investment trusts purchase, manage and sell income-producing real properties and pass the rental income and capital gains on to investors. Therefore, NAREIT’s assertion that FFO is a more meaningful performance measurement for REITs should be able to applied on the equity real estate investment trusts in Taiwan. The objective of this paper is to determine which summary measure of operating performance, Net Income or FFO, is more informative of real estate operating companies’ performance based on association with stock returns. Accordingly, the results provide information to accounting standard setters as well as real estate company managers and investors regarding the use of alternative operating performance measures, such as FFO, in audited financial statements. Key words: REITs, net income, funds from operations ∗Corresponding author, Ming-Chi Chen, Associate Professor, Department of Finance, National Sun Yat-sen University, 70 Lien-hai Rd. Kaohsiung 804, Taiwan, Tel:886-7525-2000ext 4826, Fax: 886-7-525-4899, Email: [email protected]

57

An examination of real estate valuation service providers in Hong Kong and influences upon the valuation process Lay Cheng Lim*, Stanley McGreal*, Alastair Adair * and Jim Webb#

Abstract Deregulation and globalisation of financial markets have been key factors in prompting cross-border real estate investments in general and the opening up of Asian markets in particular. Indeed the importance of globalisation of business and finance worldwide has brought about an increased need for the application of international accounting standards and associated activities including real estate valuation. To facilitate further understanding of current valuation practices and services offered across Asia and to analyse and contrast the valuation techniques and methodology used by valuers in their respective countries, a study of commercial valuers in Hong Kong was undertaken. This paper reports upon the results of interviews and questionnaire surveys undertaken in Hong Kong. In order to gain professional opinions and an in-depth understanding of the Hong Kong valuation service providers and the methods and concepts they use and the extent of their involvement with Chinese clients and businesses, the interviews targeted major real estate valuation firms in Hong Kong with a questionnaire survey circulated to individual valuers involved in the Hong Kong and China markets. Key words: Hong Kong, real estate, methods, standards, China, current valuation practice

* Centre for Research on Property and Planning, School of the Built Environment, University of Ulster, Newtownabbey, Country Antrim, Northern Ireland, BT37 0QB, UK # Real Estate Research Center, Collage of Business Administration, Cleveland State University, Ohio 44114-3610, USA.

58

Study on the Methodology of Arable Land Consolidation Potentiality Evaluation: Taking Daxing District of Beijing as a case ZHANG Zhengfeng Abstract With the development of society and economy, the main aim of arable land consolidation in our country will be changed from merely adding arable land to multipurpose development direction of promoting agricultural comprehensive productive ability and protecting eco-environment. So how to reasonable analyze arable land consolidation potentiality becomes an essential item, and also is necessary for the land consolidation planning and land consolidation project. Daxing District of Beijing is taken as the case to study. After analysis on the regional background of Daxing County, 11 evaluating indicators of arable land consolidation potentiality are selected. Based on the statistical and surveyed datum, the data of indicators can be gotten. Then the fuzzy evaluation model is built to evaluate the arable land consolidation potentiality of Daxing County.

Key words: arable land consolidation, potentiality, indicator system, Daxing District.

Contact details: ZHANG Zhengfeng, Department of Land & Real Estate, School of Public Administration, Renmin University of China, #59 Zhongguancun Street, Beijing, 100872 PR.CHINA. Tel:+86-10-62516241, Fax:+86-10-62513739

59

Spatial Autocorrelation of Housing Prices under Land Use Control in Taiwan Urban Area Yen-Jong Chen and Sio-Tong Wong

Abstract Hedonic price function is the most frequently used to construct models to estimate the housing price since Lancsater(1966) and Rosen (1974). However, when constructing the regression models based on the empirical observation to the housing prices in a same community (or city), the basic assumption of identical and independent distribution (iid) of the housing price variation would very possibly be violated. Not only did the neighborhood share the same environmental and land use control, but also the households might have similar society and economic attributes. For example, they share the same community facilities, and kids go to the same school. In fact, housing prices in the same community would not be independent, and yield less efficiency on the regression models. Our interesting is how serious would the spatial autocorrelation might affect in empirical housing price estimation under city land use control. In this study, we collected some housing transaction data in Tainan city, the 4th largest city in Taiwan. The empirical data were limited in the same area, so that all the cases share the same land use control under the city planning regulation. We located all the cases on the GIS map, and examined the independence of housing prices by means of Moran Index (Cliff, 1973). After removing cases with (highly) correlation, we constructed the modified models and compared against the original models. Our tentative results indicated that housing prices within distance of 300 meters would have significant spatial autocorrelation, and also found that the modified housing price model does not statistically different from the original models. Key words: Housing, Hedonic Price, Spatial Autocorrelation, Land use, Regression models, Moran Index, Taiwan

Department of Urban Planning, National Cheng-Kung University, Tainan, 70101, Taiwan. Phone: 886-2757575 ext. 54233, Fax: 886-6-2364906 Email: [email protected]

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The selling process: If, at first, you don't succeed, try, try, try again Paul M. Anglin* Abstract About 40 percent of attempts to sell a house end with the seller not selling. This aspect of behaviour has not been studied carefully and, by organizing the data in a way that identifies sellers instead of listings, I consider some hypotheses related to the ability of a market process to efficiently allocate resources. First, a change in market conditions may cause the seller to change their decision between the time of listing and the end date. Second, the seller may enter the market as a test and find that the buyers? willingness-topay is less than their willingness-to-accept. Third, the seller may end a listing because they are dissatisfied with a broker and wish to switch to a new broker. There is some support for each hypothesis.

JEL: C78, D80, R31, C41, D81, D83 Key words: market frictions, list price, over-pricing, selling price, liquidity, bargaining power, search, matching, time-till-sale

*Department of Economics, University of Windsor, 401 Sunset Avenue Windsor, ON N9B 3P4, Canada Email [email protected]

Chrysler

Hall

North

61

Incorporating two-income households into residential location modelling Xinling Chang∗, UNSW Göran Runeson, University of Newcastle Abstract There is a long tradition of studies on residential choice and travel to work in urban areas. However, the traditional models are facing difficulties in explaining new trends in urban development such as the increasing number of two-income households and their growing impact on housing and transport. The mainstream approach which stresses the bid-rent formulations and the access/space trade-off seems to be at variance with the current dispersal of both workplace and housing in modern cities. There is therefore a need to focus research into the distinct behaviour of these households in terms of residential location choice and journey to work. This paper proposes a utility consistent, two-stage joint choice model in which both residential location of two-income households and their commuting times are endogenously determined. The second stage, which is specified as a discrete location choice model, provides a location utility index for the first stage, which is specified as a simultaneous commuting time model. This paper suggests that the focus on the city centres and distances should change to more comprehensive measures of housing utility which includes housing characteristics and workplace accessibility. It is concluded that the joint choice model developed in this study adds to our insight into a more mature residential location theory. Key words:

Residential location, two-income households, commuting time



Contact author. Faculty of the Built Environment, UNSW. Sydney 2052. Australia. Tel: 612-9385 4761. Fax: 612-9385 4507. Email: [email protected]

62

Changing Studies on Households’ Employment Structures and Commuting Decisions: The Evidence based on the 1990’s and 2000’s Data in Taipei, Taiwan Chen, Shu-Mei* & Chin-Oh Chang**

Abstract From Year 1990 to 2000, the population characteristics and urban environments in Taipei changed a lot. There are two purposes in this paper. First, we analyze interaction relationships between income, housing consumption and commuting distances under the changing housing markets and traffic conditions. Second, we examine the hypotheses of relative resources and decision-making power, and the family responsibility and obligation, on commuting decisions over time. The empirical study employs the logistic regression model and uses the data from 1990’s and 2000’s Census of Population and Housing to examine 5 hypotheses. The empirical evidences suggest that the economic factors of housing consumptions and income resources play stronger roles than the household responsibility in commuting decision.

Key words: Household Employment Structure, Commuting Decision, Housing Consumption

* Associate Professor, Department of Real Estate Management, Kun Shan University of Technology, Tainan County, Taiwan. Address: 949, Ta-Wan Road, Yung- Kang City, Tainan County, Taiwan. Tel: +886-6-2050643 Fax: +886-6-2050578 E-mail: [email protected] **Professor, Department of Land Economics, National Chengchi University, Taipei, Taiwan. Tel: +886-2-29387478 Fax: +886-2-29390251 E-mail: [email protected] The authors would like to thank the NSC for the financial support.

63

Rental Externality, Tenure Security, and Housing Quality Shinichiro Iwata* and Hisaki Yamaga** This Version: February, 2004 Abstract In this paper, we consider three tenure modes: owner-owned housing, tenant-owned housing, and landlord-owned housing, and model the effect of the rental externality and tenure security on housing quality. We show that in theory the rental externality reduces housing quality of both tenant-owned housing and landlord-owned housing when the user’s utilization and the owner’s maintenance are independent or are substitutes. We also show that tenure security further reduces landlord-owned housing’s quality, but has ambiguous effect on tenant-owned housing’s quality. We investigate empirical tests of this issue, and obtain results that are consistent with theoretical predictions.

JEL classification: K11 (Property Law); K12 (Contract Law); R38 (Government Policies, Regulatory Policies) Key words: tenure mode; property rights; tenure rights; rental externality; tenure security; housing quality

* Faculty of Economics, Toyama University 3190, Gofuku, Toyama, 930–8555, Japan Phone: +81–76–445–6425, Fax: +81–76–445–6419. E-mail: [email protected] **Institute of Policy and Planning Sciences, University of Tsukuba, 1–1–1, Tennoudai, Tsukuba, 305–8573, Japan Phone: +81–298–53–5179, Fax: +81–298–55–3849. E-mail: [email protected]

64

On Models of Rent/Price Adjustment According to Vacancy Rate Chang-I Hua Abstract

The analytic micro behavioral approach to housing research alone has not provided guidance to housing market studies in practice which must rely upon readily available macro data, especially of the vacancy related statistics. A theoretic model, combining both micro and macro approaches, of simultaneous equations system is proposed for an abstract market of housing vacancies. It determines endogenously the vacancy level, vacancy duration, generation and absorption of vacancy flows, and market price. From the model various applications to housing market studies, including the adjustment dynamic regression models, can be derived with theoretic justifications.

Center for Real Estate Information, Taipei, Taiwan. Email:

65

Structural Analysis of Competitiveness of Housing Remodeling On Urban Redevelopment Yee-Chaur Lee, Lih-Horng Chen* Abstract In most of the developed countries, urban development is getting steady and the need for massive construction of new housing has come to its limit such that housing remodeling has gained its advantage. As urban sprawl has been argued for its social and economic cause-and-effect, structural analysis of competitiveness of housing remodeling becomes an interesting topic. Since housing remodeling gains not as much attention from the public and the private sectors, not so much research so far has been conducted on this concern. Competitiveness by its nature is a status reflecting its own capacity of technology and resources such that a ‘product’ can prevail within a segmented market, a ‘niche’ that would promote competitive advantage to sustain. This article mainly would apply Porter’s ‘five competitive forces’ as a research framework investigating the competitiveness of housing remodeling related to the stage of urban life cycle, which in some sense determines the pattern and the direction of urban redevelopment. The knowledge gained from this article is expected to advance the competitiveness and the advantage of housing remodeling on urban redevelopment. The geographic research scope would be defined in Hsinchu Taiwan, a developing city facing immediate pressure on urban sprawl for hi-tech park expansion and housing accommodation. Specifically this article intends to answer the following questions: 1 What are the driving forces and advantages of housing remodeling? 2 What are the determining factors of the competitive forces for housing remodeling? 3 What are the characteristics and impacts of ‘urban life cycle’ that would exert on housing remodeling? This paper intends to employ the following research methods: (1) literature review, (2) basic model construction and (3) remodeling firm interview. The main objective of this article is to conduct housing remodeling structure such that diverse strategies regarding urban redevelopment can be framed up.

Key words: housing remodeling, competitive forces, urban redevelopment

* Yee-Chaur Lee, Chung Hua University, Hsinchu, Taiwan, [email protected]. O: 03-5186651, F:035186677, Add: 707 Wu-Fu Rd., Sec.2, Chung Hua University, Hsinchu 300, Taiwan. Lih-Horng Chen, National Cheng Kung University, Tainan, Taiwan.

66

A Losing Brown Field, Recolored Or Reshaped? Yee-Chaur Lee, Lih-Horng Chen* Abstract Brown field in most of the developing countries are competing with time and tide nowadays. As competitors all over the world advance with traditional industries and hitech industries are introduced, traditional brown field has situated in a dilemma while its competitive advantage cannot be maintained. Where would those losing brown fields head for? Should them be reviewed from land use perspectives and recolored (rezoned) for more compact use or be reshaped with advanced management and technology skills and kept brown as still? This paper, mainly dealt with traditional industrial zoning that normally cannot develop its competitiveness, is aimed to establish a mechanism for sustainable advantage of which a losing brown field may compose as capacities. To incorporate the resources inflow and outflow of regionalized industrial zoning, this paper will frame a qualitative model compared with Porter’s diamond model from “The Competitive Advantage of Nations”. The authors would further propose a systematic approach coordinating economic inputs and outputs under the constraint of land resources. From the viewpoint of “centerperiphery structure” and “transformation effect”, this paper would be involved to differentiate the niche whether or not a brown field is competitive. Specifically this article intends to answer the following questions: 1 What are the competitive forces of a brown field? 2 What status is a losing brown field situated? 3 What are the determining factors of the competitive forces of a brown field? 4 What are the ‘critical points’ of a ‘losing brown field’ that require being recolored or reshaped? 5 What are the strategies that a losing brown field can apply to compete for redevelopment - rezone or/and reshape? This paper would employ the following research methods: (1) literature and case review, (2) qualitative model construction, and (3) systematic analysis. It is hoped that criteria can be constructed to differentiate brown fields and the strategies for rezone and redevelopment for a losing brown field are proposed. Key words: brown field, land use plan, urban redevelopment

* Yee-Chaur Lee, Chung Hua University, Hsinchu, Taiwan, [email protected]. O:03-5186651, F:035186677, Add: 707 Wu-Fu Rd., Sec.2, Chung Hua University, Hsinchu 300, Taiwan. Lih-Horng Chen, National Cheng Kung University, Tainan, Taiwan.

67

Real Option and Persistency of Property Price in Japan Motohiro Adachi Abstract This paper examines the optimal entry and exit strategy of Japanese property company’s behaviour regarding Japanese property market when the future is uncertain. Using option pricing technology, we firstly build a theoretical model of optimal timing of purchase and sale of the property. Then, we empirically test to what extent our model can explain change in the Japan’s property price during the period between 1990 and 2003. We also look at the effects of property taxation on the timing to sell and buy the property because in Japan property taxes play an important role on property market.

Key words: Japanese property market, Real Option Theory, Taxation, Optimal strategies

* Wakayama University, Email: [email protected]

68

A Dynamic Analysis of the Labour’s Housing Career in Taiwan Fu-Yu Wang *, Bor-Ming Hsieh ** and Yu-Sheng Chiang *** Abstract The purpose of this paper is to analyze the first time homeownership between two working class households in Taiwan. Based on the theory of housing career and human capital, this paper discusses blue- and white-collar working households in pursuing their housing career. A logistic discrete time model is employed to examine the impact of the household’s demographic and socio-economic characteristics on their first time home buying. The data comes from the Panel Study of Family Dynamics, which contains more than 1,300 family observations suitable for the even history analysis. Our results show that some family demographic factors, job-related migration, employment experience and the degree of urbanization have significant influences on the household’s propensity to homeownership. he results also indicate that a non-linear dependence of duration provides robust evidence in Taiwanese households’ first time homeownership. The bluecollar working households have relatively disadvantages to buy their own homes thus making them to relocate or wait longer time to enter the owner-occupied sector.

Key words: housing career, discrete time model, duration dependence

* Ph.D. Student (Contact author), Department of Urban Planning, National Cheng Kung University, No. 1 Ta-Hsueh Road, Tainan 701, Taiwan Tel: 886 6 236 4454, Fax: 886 6 275 4943 Email: [email protected] ** Assistant Professor, Department of Land Management and Development Chang Jung Christian University, [email protected] *** Professor, Department of Urban Planning, National Cheng Kung University, No. 1 Ta-Hsueh Road, Tainan 701, Taiwan. Tel: 886 6 236 4454, Fax: 886 6 275 4943 [email protected]

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The Impact of Kinship Networks on Asset Division and Financial Aid Decisions in Taiwan Wen-Chieh Wu*, Zekiye Selvili†, and Chin-Oh Chang‡ Abstract Parents face important financial decisions such as when and how to divide assets and whether to provide financial aid for their children. This paper examines the effects of certain family characteristics and dynamics on the elderly parents’ decisions of both asset division and financial aid for housing given to their children in the modern Chinese society. Using Taiwanese data from an elderly health and life survey, we find that children are more likely to receive bequeathable assets and/or financial aid for housing when they show more attention to their parents. When parents are satisfied with the quality of kinship networks, they are more likely to keep a portion of their bequeathable assets undivided as a means of credible threat for ensuring the continuance of the quality. On the other hand, when parents are not satisfied with the quality of the kinship networks, they are more likely to use the division of asset as a lure to receive for more attention from their children. Younger parents are more likely to financially aid their children in buying a house, while older parents are more likely to directly divide their bequeathable assets (including houses).

Key words: Kinship Networks, Asset Division, Financial Aid, Bequests JEL Classification: R2, J1, I1

Department of Public Finance, National Chengchi University, Taipei, Taiwan Department of Finance, California State University, Fullerton CA, USA ‡ Department of Land Economics, National Chengchi University, Taipei, Taiwan * †

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Real Estate Fund Management Pravin Mahurkar* and G.Senthil † Abstract With recession coupled with declining interest rates, real estate is one good opportunity to park funds for both long and short-term investments, it’s safe and provides high yield investment as compared to volatile returns from the stock market and limited returns from bank deposits. The real estate sector in India has assumed growing importance with the liberalization of the economy. The consequent increase in business opportunities and migration of the labor force has, in turn increased the demand for commercial and housing space, especially rental housing. Developments in the real estate sector are being influenced by the developments in the retail, hospitality and entertainment, industries, economic services and Information Technology, IT-enabled services etc. and vice versa.

Key words: Global scenario, real estate investment schemes, Indian real estate industry, real estate mutual funds, mortgage based securitisation, scope of real estate mutual fund schemes in India, key problem areas for implementation, investment objectives, risk management, legal aspects, investors perspective.

*

Pravin Mahurkar is a student of MBA (Finance, class of 2005) at ICFAI Business School, Mumbai. Address: B/603, Building no. 5,Jyoti Complex, Filmcity Road, Santosh Nagar,Goregaon (East), Mumbai-400065, India. Ph.No.- 09820304529 [email protected] † G.Senthil ([email protected] ) is a student of MBA (Finance, class of 2005) at ICFAI Business School, Mumbai.

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Integrating the Concept of Ecological Planning and Design into Planning Permit Reviewing Process of Taiwan Kang-Li Wu Email [email protected]

Abstract The concept of ecological planning and design has received widespread attention in Taiwan. Yet, how this concept should be efficiently and effectivenessly addressed and implemented in current reviewing process of planning permit system is still a critical issue that challenges many planners and decision makers. Employing the concept of ecological planning and design as well as of institutional design (regarding the design of reviewing process of land development), and using the selected cases of land development projects went through the reviewing process of Regional Planning Commission in National Taiwanese Government for past four years, this study attempts to explore three sets of research questions: (1) What key concepts of ecological planning and design should be explicitly addressed in the current reviewing process of planning permits for non-urban land development? (2) How should planners and decision markers identify the key issues that needed to be addressed in the process of land development review in Taiwan? (3) How should we modify the existing regulations and process of land development review, in order to promote the idea of ecological planning and design? Employing research methods involving literature review, case studies, and interviews, this research will provide an in-depth investigation of these research questions indicated above. Through the proposed empirical study, and an examination of this author’s three years’ experience involved in the land development review process for the Regional Planning Commission in Taiwan, this study will explore how and to what extent the concept of ecological planning and design can be addressed and implemented in land development reviewing process. It will also suggest several operational strategies for the designing of appropriate land development reviewing institution in order to promote the concept of sustainable land use planning and sustainable region. Key words: ecological planning, sustainable land use planning, sustainable region, planning permit system

Acknowledgements: The study that this paper is based on has been funded in part by the National Science Council of Taiwan. (92WFA0901143) Dr. Kang-Li Wu is currently a Committee Member of Regional Planning Commission of National Taiwan Government. The authors thank the staff of the Regional Planning Commission and the Construction and Planning Administration of National Government for their assistance.

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Problems Of Land Delivery System For Housing Development In Lagos State, Nigeria B.T. Aluko*, A. Olaleye & A. Amidu Abstract Land is a factor of production, essential to the provision of urban housing and infrastructural services and the production of agricultural goods. The explosive growth of Lagos State, the nation’s commercial nerve center and former capital territory, will test the capacity of governments and private sectors to generate jobs and to provide land for services, infrastructure, and social supports necessary to sustain livable and stable environments. The paper, therefore, examined the operational modalities and the requirements for land delivery in both formal and informal land markets in the state. To accomplish this research, secondary data were collected from relevant agencies and authorities in the state through participant observation backed up with oral interviews. Consequently, problems emanating from both markets were discerned vis-à-vis their attendant policy implications. For instance, the study revealed, inter alia, the dual concept (nature) of land acquisition generally in the city, the cumbersome and bureaucratic process in the land delivery in the formal market in addition to the exorbitant prices of land, the state of insecurity of tenure in the formal sector. Thereafter, some conclusions were drawn with a view to improving housing provision in Lagos State.

*Contact Author: Department of Estate Management, Obafemi Awolowo University, Ile-Ife, Nigeria

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Small Scale Private Real Estate Business- challenges to the sustainable urbanization : a case study of Khulna city, Bangladesh Kazi Saiful Islam & Rezaul Karim

Abstract The small scale private real estate business is flourishing day by day in Bangladesh. This paper is to identify the causes of the increment of the small scale private real estate business and it’s impacts on the urbanization pattern of Khulna city in context of sustainable urban planning. Khulna is the third largest metropolitan industrial city of Bangladesh. Due to the macroeconomic impact of globalization, the urbanization of the city is suddenly triggered up. To meet the needs of the increasing housing demand, private real estate companies have come forward with their self initiatives. But there is no national policy guidelines for this sector. Consequently, haphazard growth of this business is hindering the harmonic growth of the city. This business is growing in expense of deteriorated living environment, high traffic congestion, high land value and house rent etc. The forthcoming global era of Khulna will intensify this problem significantly. This growth is threatening Khulna structure plan. Now the question arises whether our organizational, managerial, financial, legal and political setups are strong enough to face these challenges of sustainable urban development under the threat of globalization? Functional cooperative system between state, the Civil Society and the Private Sector in the form of sustainable urban governance can solve this problem to a large extent.

Key words: Sustainable urbanization, Globalization, Private real estate company

* Lecturer, Urban and Rural Planning Discipline, Khulna University, Khulna-9208 Bangladesh.Email: [email protected] ** Professor, Urban and Rural Planning Discipline, Khulna University, Khulna-9208 Bangladesh Email: [email protected]

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Corporate Governance And Real Estate Industry Karl-Werner Schulte HonRICS and Christian Kolb Abstract Real estate is nowadays a global business and corporate governance therefore an important issue for international investors, lenders, occupiers and developers worldwide. Some of the major issues real estate companies are concerned with today are standardized property valuation, transparency, executive compensation, board member’s qualification and board appraisal, investor’s relations and corporate rating. Corporate governance has to be perceived as a big opportunity for real estate industries worldwide in order to improve their reputation and to become more professional.

* European Business School, International University Schloß Reichartshausen Ebs Real Estate Center, Schloß Reichartshausen, D-65375 Oestrich-Winkel Germany. Phone: +49-6723-69-151 Fax: +49-6723-2572 E-Mail: [email protected] ** Post-graduate research assistant, ebs REAL ESTATE CENTER, Schloß Reichartshausen, D-65375 Oestrich-Winkel, Germany Phone: +49-6723-888 634 Fax: +49-6723-888 634 Email: [email protected]

This article has been developed at the ebs REAL ESTATE CENTER of the EUROPEAN BUSINESS SCHOOL. We are grateful to the Initiative Corporate Governance der deutschen Immobilienwirtschaft e.V. for its financial support. We wish to thank the participants of the twentieth ARES Annual Conference and the anonymous referees for their helpful comments.

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Entry and Exit Decisions in Commercial Space Markets Pochin Shiue and Kanak Patel Abstract This paper presents a model that simultaneously determines tenant’s optimal entry and exit decisions in commercial space market. We model tenant’s option to lease and option to abandon, which depend on two stochastic variables: the net income before rental cost (NIBRC) and rental payment. If the ratio of NIBRC to rental payment rises to the optimal lease trigger point, idle business will become active. On the contrary, active business will be abandoned for a salvage value should this ratio fall below the optimal abandonment trigger point. Our numerical analyses first show that the correlation between NIBRC and rental payment in particular plays a crucial role in determining the optimal lease and abandonment trigger points. Furthermore, the inertia effect of the business status quo is more pronounced with higher uncertainty of NIBRC or rental payment, with greater business set-up cost and with the lower salvage value. Finally, in our empirical study the longer duration of vacancy in recession, corresponding to both relatively higher entry and exit trigger points in early 1990s, can be explained from the demand side of the UK space lease market.

Key words: duration of vacancy, entry and exit, inertia effect, option to abandon, option to lease

*Judge Institute of Management University of Cambridge **Department of Land Economy, University of Cambridge, 19 Silver Street, Cambridge, CB3 9EP, UK. Tel + 44 (0)1223 337147, Fax +44 (0)1223 337130 Email: [email protected]

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Urban and Rural Land Reforms: The Nigerian Experience Ogedengbe, P.S.* and Obafemi Awolowo Abstract Traditional societies in Nigeria have over the years developed ways of controlling the acquisition and utilization of land, which were perceived inefficient by various stakeholders. These inefficiencies brought about the Land use Act of 1978 in Nigeria. The paper analyses the Land use Act of 1978 as a land reform instrument in Nigeria. The various tenurial systems that were in existence in the country prior to 1978 were examined vis-à-vis the tenurial system introduced by the Land Use Act of 1978 with a view to determining the appropriateness of changes that had taken place in the land holding structure since 1978. It was pointed out that various stakeholders have expressed disillusionment with the post 1978 policy since the problems experienced before 1978 are still present in the current Nigerian Land policy. The paper recommended among others that the present land policy should be reviewed in order to make it more responsive to the yearnings of various stakeholders. Key words: Land reform, tennurial system.

* Estate Management, Lecturer in the Department of Estate Management, University, IleIfe, Nigeria ([email protected]) GSM 234 803 4738 080

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The Relationship between Chinese Couples’ and Female Natal Families’ Housing Location Jing-chzi Hsieh* Abstract This paper examines the Chinese couples’ housing location is related to female natal families’ housing location in central regional area, Taiwan, using a sample of 421 households and information collected from primary questionnaire. The experimental results show that the distance between Chinese couples’ and female natal families housing location is significantly related to both of family characteristics including female natal families’ caring children, the frequency of couples and female natal families’ interaction, bearing the expense responsibility of female natal families, the couples’ houses owned by the female natal families, the importance of considering the distance while housing location choice and the couples’ status like living district, household type, education status. Those results indicate that some of the married daughters were not treated as members of the “other” family (i.e. husband’s family) like traditional Chinese societies nowadays in Taiwan and also extend the gender research to housing location. Key words: housing location, female natal family, primary questionnaire

* Associate Professor, Department of Land Management, Feng Chia University 100, Wenhwa Rd., Seatwen, Taichung, Taiwan 40724, R.O.C. Tel: +886-4-451-4713 Fax: +886-4-451-7560 E-mail:[email protected]

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How Suitable are Contingent Valuation Techniques for Valuing Properties in No-Market Situations? Olusegun A. Ogunba* Abstract Replacement cost approaches have traditionally been used for the valuation of properties not normally exchanged in the market (no market situations), based on the rationalizations of Ricardian economics and the belief that no prudent buyer or investor will pay more for a property than the amount for which the site could be acquired and for which improvements that have equal desirability and utility can be constructed without undue delay. The paper examined the suitability of an environmental valuation technique - contingent valuation - as a more rational substitute for the traditionally used resort to replacement cost for such no-market situations. The method was to examine which of these two alternatives provides a more incontrovertible theoretical basis and then to consider issues of relative practical usability. From the theoretical perspective, the paper reasoned that contingent valuation provides a more unassailable economic basis for pricing: cost approaches focus on the supply function of the property market to the neglect of the demand function, and at best provide only an indication of upper limits of value. Contingent valuation on the other hand captures both producer and consumer surplus features of the market, but involves peculiar practical implementation difficulties (simulation biases). The paper reached the conclusion that the simulation biases are surmountable, and all things considered, contingent valuation deserves to become a standard technique. The paper closes with the recommendation that valuers, regulatory institutions and valuation textbook writers should look seriously into making use of the technique for no-market situations.

Key words: Contingent valuations, no-market situations, replacement cost valuations.

* Senior Lecturer in the Department of Estate Management, Obafemi Awolowo University, Ile-Ife, Nigeria. GSM 2348034014739 Email: [email protected]

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Estimating Property Value by Replicating One Tony Lai, Kerry Vandell*, and Ko Wang** June 2003

Abstract This paper develops a Replication method for estimating property values. Under this method, an appraiser's assignment is to estimate an optimal weight vector that can best replicate the property attributes of a subject property using comparable properties. Once the weights are determined, the value of the subject property is simply a linear combination of the values of the comparable properties based on the estimated weight vector. Since there is no need to estimate hedonic prices (or adjustment factors) of property attributes, the Replication method is superior to the traditional Regression method when there are multicollinearity and mis-specification problems. The Replication method also outperforms the Grid method when the number of comparables used in the valuation is no less than the number of property attributes identified for the comparable properties.

*Tony Lai is Professor, Department of Finance, California State University-Fullerton. Kerry Vandell is Professor, Department of Real Estate, University of WisconsinMadison. **Ko Wang is Professor, Department of Finance, California State University-Fullerton, Fullerton, CA 92834 Email: [email protected]

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Urban Mortgage Financing and the Search for Sustainable Property Development in Nigeria OLOYEDE, S.A. and Obafemi Awolowo Abstract The paper is aimed at identifying significant bottlenecks in urban property redevelopment from the experiences of primary mortgage institutions and private estate developers in Nigeria. The paper surveyed primary mortgage institutions and private estate developers (accredited by the Federal Mortgage Bank of Nigeria) in the country to identify significant micro and macro economic problems they typically encountered between 1991 and 2003. The results of the study identified issues such as inadequate funding as a result of longer than expected building period, higher than expected building cost in addition to variable interest rates on borrowed capital. Moreover, it was discovered that mortgagors divert income from completed housing projects meant for loan servicing to other uses. The paper suggests a variety of macro and micro economic measures to reduce building costs and stabilize mortgage loan interest rate over time. Key words: Accredited Primary mortgage institutions, Accredited private estate developers.

* Estate Management, Email: [email protected] GSM 234 803 4722 469) Lecturer in the Department of Estate Management, University, Ile-Ife, Nigeria

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An Evaluation of the National Housing Fund Scheme in Nigeria S A Oloyede*, O A Ogunba,** C K Ogunba*** And P S Ogedengbe**** Abstract Substandard and unaffordable housing supply is a natural problem that needs long-term solutions. Through the national housing fund scheme introduced in 1991, the Federal Government of Nigeria provides financial assistance to Nigerians in an attempt at improving housing provision strategies for the populace. The paper compared the style of Housing fund implementation in Nigeria with the implementation strategies in Finland, United States and China. It also evaluated the success level of the peculiar brand of implementation in Nigeria. It noted a variety of problems including defective administrative communication and time consuming bureaucratic procedures. Because of these identified problems, the context of programme evaluation in Nigeria has been demanding and complex and the level of success of the funding exercise has been rated very low. The paper noted the usefulness of drawing from international experiences in the search for housing value, autonomy of banks in accessing the housing fund, flexibility in the choice of collateral for mortgage loans, teamwork as well as effective communication among the operators. Accordingly, the paper examined how best the country can achieve national goals of funding housing by reference to the modus operandi in countries that had been more successful in funding home ownership schemes.

Key words: Home-ownership, sustainability, international comparisons. * Lecturer in the Department of Estate Management, Obafemi Awolowo University, IleIfe, Nigeria GSM 234 803 4722 469 Email: [email protected] ** Lecturer in the Department of Estate Management, Obafemi Awolowo University, IleIfe, Nigeria. GSM 234 803 4014 739 Email: [email protected] *** Lecturer in the Department of Economics, University of Ado-Ekiti, Ado-Ekiti, Nigeria. GSM 234 803 5839 960 ****Lecturer in the Department of Estate Management, Obafemi Awolowo University, Ile-Ife, Nigeria. GSM 234 803 4738 080 Email: [email protected]

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The effectiveness evaluation and the housing market impact of housing policies in Korea Jin-Kyung Lee* And Kyn-Hyuck Ahn** Abstract To evaluate Korean housing policies for half-century, this paper assesses the achievement of governmental hosing programs by the effectiveness evaluation model and examines the impact of housing policies on the hosing market by investigating the relationship between house prices and mass production of hosing units, vitalization of housing market, living stability for the low income bracket, and control of real estate speculation programs

Key words: housing policies evaluation, the effectiveness evaluation model, the housing market model

* Doctor candidate, Urban Design Laboratory, 38-219, School of Civil, Urban & Geosystem Engineering, Seoul National University, San 56-1 Shinrim-dong, Gwanak-gu, Seoul, Korea 151-742 Telephone: 82-2-880-7366 Fax:82-2-889-0032 Email: [email protected] ** Professor, School of Civil, Urban & Geosystem Engineering, Seoul National University, San 56-1 Shinrim-dong, Gwanak-gu, Seoul, Korea 151-742

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What Influence Customers’ Choices for Real Estate Brokerage Service in China? Huang Ying* and Liu Hongyu** Abstract Based on the data samples collected from 8 major cities in China, this paper will first analysis why or why not customers choose to use real estate brokerage, how they choose the brokerage firms and what the major factors influence their decision; then explore the possible development direction for real estate brokerage firms in the future. The results show as following: More and more housing customers have recognized the importance and convenience of real estate brokerage service and would like to use the service when needed. But the customers in different cities have different opinions. There are lot of factors influence weather the customers choose to use the real estate brokerage service, such as the customers’ income, the education level of customers, the time cost of the customers and the credit and mature degree of the real estate brokerage service industry in each city and so on; There are many aspects that the customers will inspect when they choose which firms to use and distinct differences exist between the considerations of buyers and sellers. The development of real estate brokerage service firms depend on the choices of customers, so they should adjust their developing strategies according to the customers’ demands and give emphases to the more important aspects such as the firm integrated image, the mouth of client, internal management; service quality, etc.

Key words: customers, choice, real estate brokerage service

* Contact author: Ph. D Candidate, Institute of Real Estate Studies, Room 122, He Shan Heng Building, Tsinghua University, Beijing, 100084, China. Tel: 8610-62795117 E-mail: [email protected] ** Professor and Director, Institute of Real Estate Studies, Room 123, He Shan Heng Building, Tsinghua University, Beijing, 100084, China. Tel: 8610-62795115 E-mail: [email protected]

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LTV and Credit Term Choice in Beijing Residential Mortgage Market Sun Bing, Liu Hongyu, and Zheng Abstract Under the control of the People’s Bank of China on the upper limit of loan-to-value (LTV) and credit term, the borrowers have limited choices on the Chinese residential mortgage market at the present stage. Based on the micro-data from the Beijing mortgage market in 2001, the paper, employing logistic regression models, quantitatively analyses the impact of three factors on the borrower’s LTV and credit term choice: 1) economic factor (i.e. family income and house price), 2) personal characteristic factor (i.e. age, gender, marriage and education degree) and 3) loan characteristic factor (i.e. interest rate). The conclusions indicate that the economic factor has significant influence on the mortgage choice, i.e., family income correlates with term negatively and with LTV positively, while house price has the opposite correlations. As for the personal characteristic factor, although gender has non-significant impact on borrower’s term choice, female is apt to choose lower LTV. Moreover, the paper also discloses that the unmarried borrower prefers shorter mortgage term, while the people with higher education more likely chooses longer mortgage term. Some conclusions in the paper could be reference for the commercial banks to better understand their clients and develop their operation.

Key words loan-to-value, credit term, logistic regression model

* Contact author: PhD. Candidate,Institute of Real Estate Studies, Tsinghua University, Beijing, 100084, China Tel: 8610-62795117 Mobile Tel: 13020046176 E-mail: [email protected] ** Professor and Director, Institute of Real Estate Studies, Tsinghua University, Beijing, 100084, China. Tel: 8610-62795115 E-mail: [email protected] *** Ph.D Candidate, Institute of Real Estate Studies, Tsinghua University, Beijing, 100084, China. Tel: 8610-62772734 E-mail: [email protected]

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Commercial Real Estate Portfolio Strategy in China Weng Shaoqun and Huang Ying Abstract In order to survive the severe competition environment, real estate developers’ as well as institutional investors, become more care about the commercial real estate portfolio strategy in China. This calls for detailed studies in this field. This article compares the strategies to full diversification by both property type and region and try to determine whether diversification within a region by property type is better than diversification between regions within a property type. Without applying mean-variance optimization, we use k-means clustering as an improving diversification method to test whether portfolio diversification is achieved more effectively across property types or across cities. The bootstrapping methodology, which investigates the robustness of the clustering algorithm, is applied to test the validity of the output by giving the significance of city associations or property type associations. Since realizing clustering method is not a substitute for investigation of economic differences across regions, we also analyze the variables that are linked to local economic conditions through principle components analysis. The research result presents that demand and supply forces, such as local GDP, income level, land supply and other variables may be the critical factors supporting the strategy proposal.

Key words: real estate; portfolio management; diversification

* Contact author: PhD. Candidate, Institute of Real Estate Studies, Tsinghua University, Beijing, 100084, China Tel: 8610-62795117 E-mail: [email protected] ** Ph. D Candidate, Institute of Real Estate Studies, Room 122, He Shan Heng Building, Tsinghua University, Beijing, 100084, China. Tel: 8610-62795117 E-mail: [email protected]

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High Homeownership Rate and Low Capitalization Rate: Evidence from Housing Market in Urban China Siqi Zheng* and Jing Wu** Abstract China’s urban housing market has a very high homeownership rate of 82.9%, while the capitalization rate is extremely low as 5.1%. We make an attempt to explain such a distinct phenomenon from several aspects, focusing on the gradually mature investment demand for housing in urban China. Those short-term investors and speculators attracted by rapidly rising housing prices do not care for low rent incomes related to the small cap rate, but get high capital gains on rapid resale, further depressing the rate. For the majority of urban households, the extreme lack of investment instruments now and some unique merits of housing investments make them can still bear the unfavorable cap rates and keep active in housing purchase. But the current rate is near the tolerable margin. its further drop will definitely discourage homebuyers and bring losses to owner-occupiers and long-term investors. Key Words: Homeownership rate; Capitalization rate; Housing market; Urban China

*Contact author: Ph. D Candidate, Institute of Real Estate Studies, Room 122, He Shan Heng Building, Tsinghua University, Beijing, 100084, China. Tel: 8610-62772734 Email: [email protected] ** MSc Candidate, Institute of Real Estate Studies, Room 120, He Shan Heng Building, Tsinghua University, Beijing, 100084, China. Tel: 8610-51533309 E-mail: [email protected]

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An Investigation of Buyer Search in Guangzhou Housing Market Liu Hongyu*, Zheng Siqi**, Sun Bing*** Abstract This paper explores housing buyers’ search behavior under imperfect information, using housing market in Guangzhou, China as a case. It describes the framework of housing search process in China, its structure and differences from abroad. It also analyzes the information cost caused by several constrains in China’s housing market, such as the immature nature of the brokerage industry, the lack of information transmission system and quality standards in the market, which all contribute to the high level of information asymmetry in the housing market. Secondly, the buyer search duration and intensity are modeled and estimated, using the data from a unique survey in Guangzhou. It can be seen that the high information cost greatly constrain households’ moving desire; lengthen the search duration, especially for those who are unfamiliar with market conditions. Using Brokerage service can effectively shorten the duration and improve housing consumption level. The empirical findings of this paper implies that effective information delivery system and appropriate brokerage organizing structure will greatly reduce the information cost and realize households’ housing demand. Key words: Housing search, imperfect information, Information cost

* Professor and Director, Institute of Real Estate Studies, Room 123, He Shan Heng Building, Tsinghua University, Beijing, 100084, China. Tel: 8610-62795115 E-mail: [email protected] **Contact author: Ph. D Candidate, Institute of Real Estate Studies, Room 122, He Shan Heng Building, Tsinghua University, Beijing, 100084, China. Tel: 8610-62772734 Email: [email protected] ***Ph. D Candidate, Institute of Real Estate Studies, Room 120, He Shan Heng Building, Tsinghua University, Beijing, 100084, China. Tel: 8610-62795117 E-mail: [email protected]

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Spatial Autocorrelation of Housing Prices under Land Use Control in Taiwan Urban Area Yen-Jong Chen* and Sio-Tong Wong Abstract Hedonic price function is the most frequently used to construct models to estimate the housing price since Lancsater(1966) and Rosen (1974). However, when constructing the regression models based on the empirical observation to the housing prices in a same community (or city), the basic assumption of identical and independent distribution (iid) of the housing price variation would very possibly be violated. Not only did the neighborhood share the same environmental and land use control, but also the households might have similar society and economic attributes. For example, they share the same community facilities, and kids go to the same school. In fact, housing prices in the same community would not be independent, and yield less efficiency on the regression models. Our interesting is how serious would the spatial autocorrelation might affect in empirical housing price estimation under city land use control. In this study, we collected some housing transaction data in Tainan city, the 4th largest city in Taiwan. The empirical data were limited in the same area, so that all the cases share the same land use control under the city planning regulation. We located all the cases on the GIS map, and examined the independence of housing prices by means of Moran Index (Cliff, 1973). After removing cases with (highly) correlation, we constructed the modified models and compared against the original models. Our tentative results indicated that housing prices within distance of 300 meters would have significant spatial autocorrelation, and also found that the modified housing price model does not statistically different from the original models. Key words: Housing, Hedonic Price, Spatial Autocorrelation, Land use, Regression models, Moran Index, Taiwan

*Department of Urban Planning, National Cheng-Kung University, Tainan, 70101, Taiwan. Phone: 886-2757575 ext. 54233 Fax: 886-6-2364906 Email: [email protected]

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Valuation Issues of Real Estate Securitization in Taiwan Ying-Hui Chiang*, Chin-Oh Chang† Abstract Real Estate Securitization Act was approved in Taiwan on July 9, 2003. There are two types of securitization -- Real Estate Trust and Real Estate Investment Trust in Taiwan. The purpose of this research is to discuss the valuation issues of Taiwan-REITs. The market comparable approach is the most popular method for real estate appraisal in Taiwan. But this approach focus on how much is worth of the ownership rather than the yield of the real estate. It’s not suitable for valuing the assets of REITs. Although the income approach is the better way for valuing the assets of REITs, but there are still many problems to apply this method. The research will attempt to analyze and solve these issues. In addition, the Act needs REIT to explore the net asset value (NAV) quarterly at least. And, REIT must reappraise the assets when its NAV’s composite index changes 15% up or down. The research simulates the experiment from 1996 to 2003. From this study, we will observe the change of this period and review the regulation.

Key words: Valuation, REIT, Taiwan

* Ph.D Student , Department of Land Economics, National Chengchi University, E-mail:[email protected] qProfessor, Department of Land Economics ,National Chengchi University, Address: 64, Sec. 2,Zhi-nan Rd., Wenshan, Taipei 116, Taiwan, Republic of China TEL: 886-2- 29387478 FAX: 886-2- 86619365 E-mail:[email protected]

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Assumption Financing and Property Values: A New Perspective and Valuation Implications Dogan Tirtiroglu* Abstract This paper benefits from the Adjusted Present Value (APV) in advancing a theoretical framework for valuing properties financed especially under assumption financing. We use APV to show that the valuation process should first establish a subject property’s allequity value. Once this is accomplished, APV suggests that an analyst consider various incremental values from using debt financing and that those deemed belonging to the seller be added to the all equity value to establish a final property value.

* Associate Professor of Finance, Department of Finance Faculty of Commerce and Administration, Concordia University, Montreal, PQ H3G 1M8, Canada Tel: (514) 848-4119 Fax: (514) 848-4500 E-mail: [email protected]

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Integrated Analog Method in Chinese Urban real estate Forewarning System Zhang Hongming and Chen Zeming* Abstract

Real estate is are in very close relations with national economy and people’ lives. Government and market need a set of practical real estate forewarning system to direct decision. Since 1990’s, China has begun with research of the real estate forewarning system. The main forewarning methods consist of boom cycle method, integrated analog method and system model method. This paper finds the integral analog method is suitable for Chinese market environment and data terms. This paper divides the goal of forewarning system into three aspects, including the relationship of between real estate industry and national economic relation, the supply-demand relationship of real estate market and the structural balance of supply. This paper chooses indexes and weight by surveying experts and market, and then the paper integrate these data to real estate market temperature and balance degree, and this paper gives forewarning limits by error theory , on which we judge the whole state of the real estate industry.

Key words: Forewarning, Integral Analog Method

* Contact author: Real Estate Research Center, Shanghai Academy Social Sciences, Room 430, No 622-7, Huaihai Zhong Road, Shanghai, PRC(200020) Fax: 086-21-53065811 Tel: 086-21-63858844 Email: [email protected]

92

A Study on the Housing Vacancy Rates in Taiwan + Li-Min Hsueh* and Hsi-Peng Tseng** Abstract The 2000 Population and Housing Census (PHC) in Taiwan, which was conducted every ten years, shows that the housing vacancy rate shifted from 13 per cent in 1990 to 17.6 per cent in 2000. The high vacancy rate level in Taiwan is a consequence of housing and land speculation that arose during the process of Taiwan’s economic development. The bursting of the real estate bubble has continued to be a serious threat to economic stability over the past decade. Therefor, how to correctly estimate the vacancy rates becomes an important issue for housing researchers as well as policy makers in Taiwan. The publication of the PHC in Taiwan enables us to utilize the no sampling error character of census to do research on small geographic units. The purpose of this paper is to investigate the housing vacancy phenomenon by using the PHC data in the township level, the third tier of government. We can find more rich information by using township level data, which cannot be found in the county level data, the estimating results would thus have higher degree of reliability. More specifically, the purposes of this paper are as follows: 1.To classify and compare the changes of vacancy rate in the 1990 and 2000 census data in the township level. 2.To establish the theoretical relationship between housing price and vacancy rate. 3. To empirically find out the factors that affect the vacancy rate. 4. To estimate the natural vacancy rate for each township.

Key words: housing vacancy rate, population and housing census, Taiwan.

+ * **

Abstract for submitting to the AsRES conference, 9-12 August, 2004, The Grand New Delhi, India. Associate Professor, Department of International Trade, Chung Kuo Institute of Technology, Taipei, Taiwan. E-mail: [email protected] Ph.D. Candidate, Graduate Institute of Urban Planning, National Taipei University, Taipei, Taiwan. E-mail: [email protected]

93

A Retrial of Public Information, Resource and Private Development in Taiwan’s Spatial Production Processes Yan-Wen Hunag* Abstract The relation between demand and supply is an essential marketing principle. The social cost is a critical issue in economic study, especially in public policy making. In economic term environment and urban realm are the public resource or the public goods. Urban planning as a public policy interacts with private development and its economic operation. They both frame the entire institution that influences economic performance. In The Land Law of Taiwan, property developments are considered as territorial improvements and an addition of the spatial value. Additionally, the planning and development often take public resource and commercialise it; and they influence on spatial quality (negatively or positively). In various economic theories, information is considered a resource equal to physical goods. In these circumstances, it arouses the debates and issues from these increasing land value and property price, spatial trading, because of the natures of real estate and land. Additionally, Land is not entirely privatised, and somehow it is common territory and public property. Because of social fairness and the official information, taxing developers becomes a new contention. On the contrary, the other opinion is to tax the investors if they gave incorrect announcement that increase social cost or waste public resource. A better institution is to reduce the public and private cost and increase benefit fairly. These objectives are achieved by the effective information and operations of the entire institution. In brief, a comprehensive urban development should not only consider private investment but public benefit. This paper intends to clarify, the rights, interests and obligation in entire spatial production processes; and based on social justice it is need to suggest potential improved institutional framework in Taiwan’s context. Key words: Information, marketing, public and private

* Contact Address: Office: JUCD, Oxford Brookes University, Headington Campus, Gipsy lane, Headington, Oxford, OX3 0BP. Home: 84 Demesns Furze, Headington, Oxford, OX3 7XG until 15th, July. Tel: (O) 01865 483620, (H) 01865 751014 Email: [email protected] [email protected]

94

Value at Risk of Mortgages Ren-Raw Chen*, Hsien-Hsing Liao** and Tyler T. Yang*** Abstract Despite the wide use of risk neutral pricing (or no arbitrage pricing) in derivative valuation, the methodology has not been able to deal with mortgage pricing issues. Two major risk factors, default and prepayment, cannot be priced with the risk neutral methodology. This is because these risks cannot be hedged away via continuous trading that is the centerpiece of the risk neutral pricing methodology. It is also widely recognized that these two embedded options are not exercised optimally. For these reasons, we develop in this paper an actuarial based pricing methodology that allows noncontinuous trading or for inefficient underlying commodity such as housing. The housing market is inefficient due to its high unit value, localized market, and long and predictable cycle. As a result of discrete trading, our equilibrium pricing methodology relies on the “real measure” as opposed to the “risk neutral measure”. The use of real measure enables the integration of the term structure model (usually modelled under the risk neutral methodology) and default and prepayment models. With equilibrium pricing, all risk factors, interest rate, house price appreciation rate, prepayment, and default probabilities can be brought to a consistent pricing environment for the first time. Via a series of numerical examples, we demonstrate that large pricing biases are introduced by the mixing of risk neutral pricing methodology with actuarially based default and prepayment functions. The examples also demonstrate the considerable bias of using risk-neutral probabilities in measuring the value-at-risk of mortgage related contracts.

*Rutgers Business School, Rutgers University, 94 Rockafeller Road Piscataway, NJ 08854 Email:[email protected] ** Contact Address: Department of Finance, National Taiwan University, No. 85, Sec. 4, Roosevelt Road, Taipei 106, Taiwan. Tel 886-2-2363-8897 Email: [email protected] *** Integrated Financial Engineering Inc., 51 Monroe Street, Plaza E-6 Rockville, MD 20850, Email: [email protected]

95

Street Trading As A Menace to Healthy Environment in Nigeria P O Olawuni* Abstract Street trading is one of the commonest and important occupations in most African countries in the recent time. And, it is one of the many problems facing Nigeria’s major towns , which constitute menace to the environmental issues, especially in Oshodi, Lagos state. Environmental management and sustainable development is now a growing concern in Nigeria, especially in commercial areas. But, despite the fact that few private organizations are seriously battling with environmental problems in Lagos State in support of government efforts, yet the environmental conditions remained unabated. This study examined the various environmental problems in Oshodi area, which has the highest concentration of street trading in Lagos State. The set objectives include: (i) an examination of the socio-economic characteristics of the street traders; (ii) an assessment of the problems, which street trading posed to urban environment, and; (iii) physical policy recommendations for alleviating environmental problems in order to bring about healthy environmental sustainability. In carrying out the study, 200 structured questionnnaires were administered on the traders, buyers and commuters, the questionnaire addressed issues like, reasons for the job preference, place of residence, educational background, risks, involved, waste management efforts amongst others. The studies revealed that majority of the street traders come from various part of Lagos State, even neighbouring state. Their activities constitute problems to free traffic flow, high rate of waste generation, harassment, frequent loss of life among others, thereby negating the healthy environmental situation expected of such a place.

* Department of Urban & Regional Planning, Obafemi Awolowo University, Ile-Ife, Nigeria. Email [email protected]

96

Regenerating Public Housing Estates in Singapore: Impacts and Residents’ Satisfaction Lawrence Chin*, and Samuel Oh Abstract Having provided basic housing for about 85% of Singapore’s population, the Housing and Development Board (HDB) has started to embark on the next stage of housing development, namely the Main Upgrading Program (MUP) to regenerate the older housing estates, which are more than 20 years old. The regeneration project is reported to cost the Government about US$300 million a year to improve the condition of older public flats. However, it is necessary to determine whether these are monies well spent. Have the upgrading program benefited the residents? Are they happy with the works carried out in their estates? This paper examines the impact of regeneration in public housing estates in Singapore and assesses residents’ satisfaction with the improvement works. The results found that, among the three categories of upgrading works (precinct, block and unit), residents were most satisfied with the regeneration within the block followed by within the unit and precinct. Such findings would be useful to the public housing authority when they plan the MUP for future older estates. For example, undesirable consequences such as creating a noisy environment and building facilities that are inconvenient or unpopular with the residents could be avoided. It would also achieve a more equitable channelling of resources and public funds by ascertaining actual residents’ needs and carrying out only those upgrading works desired. Key words: Public housing, regeneration, resident satisfaction, precinct, blocks.

* Department of Real Estate, National University of Singapore, 4 Architecture Drive Singapore 117566, Fax number: (65) 775 5502 Email: [email protected]

97

The Urban Poor and Housing Regeneration in Seoul Seong-Kyu Ha*

Abstract Since the 1960s, Korea has achieved remarkable success in reducing poverty. But behind this picture of growth and progress, Korean housing has experienced serious problems. Traditionally, city governments had seen such ‘informal settlements’ as illegal slums, lacking proper services or layout and damaging both to the health of the occupants and to the appearance of the city. They attempt hastily to push through settlement schemes, which are based on misconceptions and spurious assumption. Nearly a quarter of all households in 2000 lived in accommodation that did not meet minimum standards in terms of floor space and basic facilities. New housing can be a driver of urban regeneration and decent housing stimulates both physical and economic improvement. In Korea, the housing regeneration projects tend to construct multi-family housing units and to pay less attention to rehabilitation of existing housing and community. The key issues covered in this paper are: (1) the characteristics of urban housing poverty, (2) causal model of housing regeneration, and (3) policy implications and issues. The issue of housing insecurity and inequality arises most acutely in the case of urban redevelopment projects in low-income residential areas. The following questions are still raised here: what role has the government played in the housing regeneration process? Who has benefited directly from the redevelopment of substandard housing areas? The primary goal of housing regeneration should be given actively involving local residents and tenants in the planning and management of housing provision and redevelopment as a prerequisite to successful programme delivery; and experimentation with different models of housing construction appropriate to local needs and the achievement of ‘balanced’ and sustainable regeneration.

Key words: urban poor, housing regeneration (redevelopment), substandard housing

* Professor and Professor & Dean, Graduate School of Social Development, Chung-Ang University, Korea. 221 Heukseok Dong, Dongjak-Gu, Seoul Tel 82-2-820-6130 Fax: 82-2-813-8069 E-mail: [email protected]

98

Incorporating two-income households into residential location modelling Xinling Chang∗, and Göran Runeson Abstract There is a long tradition of studies on residential choice and travel to work in urban areas. However, the traditional models are facing difficulties in explaining new trends in urban development such as the increasing number of two-income households and their growing impact on housing and transport. The mainstream approach which stresses the bid-rent formulations and the access/space trade-off seems to be at variance with the current dispersal of both workplace and housing in modern cities. There is therefore a need to focus research into the distinct behaviour of these households in terms of residential location choice and journey to work. This paper proposes a utility consistent, two-stage joint choice model in which both residential location of two-income households and their commuting times are endogenously determined. The second stage, which is specified as a discrete location choice model, provides a location utility index for the first stage, which is specified as a simultaneous commuting time model. This paper suggests that the focus on the city centres and distances should change to more comprehensive measures of housing utility which includes housing characteristics and workplace accessibility. It is concluded that the joint choice model developed in this study adds to our insight into a more mature residential location theory. Key words:

Residential location, two-income households, commuting time



Contact author. Faculty of the Built Environment, UNSW. Sydney 2052. Australia. Tel: 612-9385 4761. Fax: 612-9385 4507. Email: [email protected]

99

Price Discovery and Policy Impacts in the Public and Private Housing Markets in Singapore Ming-Chi Chen*, I-Chun Tsai* and Tien-Foo Sing** Abstract The public and private housing markets in Singapore are though differentiated both in terms of price, designs, quality of finishes, facilities and also lease structure, the longterm price trend, however, are not disintegrated. Upward mobility for public housing dwellers to the private housing is a common phenomenon, especially during the market booming periods in mid 1990s. The private housing prices are believed to be supported by the public housing price trends in the long term. There are significant price discovery evidence found in the earlier study by Ong and Sing (2002). There is a restricted re-sale market for public housing markets in Singapore, because the public housing dwellers are prohibited to sell the market within five years of their purchase. The prices of public housing are normally sold at a subsidized rate by the government agency, the Housing Development Board. The public housing price is, therefore, believed to be less susceptible to market volatility compared to private housing prices. The private house prices obviously are fully determined by market forces, and there are no subsidies granted by the government. The prices are more likely to fluctuate in accordance to the market and economic cycles. Therefore, it would be interesting to examine whether both the private and public housing markets have been affected by the same extent by the recent financial crisis in July 1999. In mid 1990s when the market was overheating and the price bubble has been inflated tremendously by speculative activities in the market, government stepped-in in May 1996 by introducing a slew of measure aimed to cool down the market. The same measures did not affect the public housing markets. We would therefore seek to test in this paper to see if the same effects were experienced by the two different markets. The paper would also examine the reactions of these markets to changes in economic variables like interest rates and economic outputs. The empirical tests of the long run relationships between the two sub-markets will be conducted using the stochastic permanent break (STOPBREAK) model proposed by Engle and Smith (1999).

* Department of Finance , National Sun Yat-sen University, Taiwan, Email: [email protected] ** Department of Real Estate, National University of Singapore, Singapore Email: [email protected]

100

The Change in Housing Tenure Choice in the Past Decade

Chiuling Lu* and Christine W. Lai Current Version: March 13, 2004 Abstract Using the six most recent Surveys of Consumer Finance (SCFs), we try to examine how the divergence between the investment demand and consumption demand for housing changed over the past decade. We further test the impact of social interaction on households’ housing tenure choice. Finally, we explore how those changes are correlated with economy cycles and geographical regions.

*

Address correspondence to Chiuling Lu, Department of Finance, Yuan Ze University, Chung-Li, Taoyuan, Taiwan, tel: +(886) 3463-8800, fax: +(886) 3435-4624, e-mail: [email protected] 101

Pricing Default Risk of Index-Linked Mortgages Isil Erol and Kanak Patel*

Abstract This paper extends the traditional risk-neutral valuation for pricing the expected inflationindexed mortgage contract with embedded default option. Using the backward pricing method, we evaluate the civil servant’s wage-indexed payment mortgage (WIPM) contract in Turkey, which is linked to the expected inflation. The expected inflation and the house price are the two stochastic variables underlying the WIPM contract. The numerical results show that due to the adverse effect of inflation uncertainty (positive shocks to inflation) on real rate of interest, the WIPM contract provides better inflation hedge than the standard adjustable rate mortgages. Results also show that house price volatility has a greater effect on the default values in comparison to the expected inflation volatility.

* Contact Address: Dr K Patel, University of Cambridge, 19 Silver Street, Cambridge CB3 9EP, UK. Tel +44 (0)1223 337147, Fax: +44 (0)1223 337130. Email: [email protected]

102

Mortgage Curtailment and Default* Che-Chun Cary Lin,** Perry Wang*** and Tyler Yang**** Abstract This paper studies the impact of mortgage curtailment behaviour on the subsequent default probabilities. Almost all mortgage prepayment literature focus on the analysis of complete payoff. That is, when the borrower chooses to pay off the entire remaining balance of the mortgage by refinancing or as a result of the due-on-sale clause. Although curtailment is not a popular event in the western countries, it is the dominant form of prepayment in Asia. Curtailment prepayment of a mortgage pool has very distinct implication on subsequent default probabilities than full prepayments. The literature documented the adverse impact of prepayment on the quality of the mortgages remain in a pool following a major refinancing opportunity. The fact is that the borrowers who can afford to refinance would have already done so. Those borrowers remain in the pool tend to be the ones unable to refinance due to insufficient income or house value to qualify for a new mortgage. Curtailment, on the other hand, tends to have positive impact on the overall quality of a mortgage pool. With the reduction of remaining balance of individual loans, the average loan-to-value ratio decreases, making the loans less likely to experience negative equity. The fact that the borrower is able to pay extra amount indicates the excess repayment coverage capacity, making ability to pay problem less likely. Both situations lead to lower subsequent default rates. Using a sample of over 10 years mortgage performance records from an Asian bank, we studied the impact of curtailment on mortgage default risk. The results of the logistic regressions indicate that the cumulative curtailment is the most significant factor in predicting future default probabilities of a seasoned mortgage pool. This finding suggests that mortgage modeling in the Asian countries would be very different from their western counter parties.

* The opinions expressed in this paper are those of the authors alone and do not necessarily reflect the views of Fubon Financial Holding Company. ** Corresponding author: National Tsinghua University, 101, Sec. 2, Kuang-Fu Road, Hsin-Chu 30013, Taiwan Email: [email protected] .*** Fubon Financial Holding Company, 3F 237 Section 1 Chien Kuo S. Road, Taipei 106, Taiwan Email: [email protected] **** Integrated Financial Engineering Inc., 51 Monroe Street, Plaza E-6, Rockville, MD 20850 Email [email protected]

103

Information Contents of Dividend Payouts of Listed Property Companies in Singapore SING, Tien Foo* and LEE, Sze Teck Abstract Miller and Modigliani (1961) stated that dividend policy does not matter in a perfect market. However, capital markets are not perfect because there exists information asymmetry between managers and investors. Investors in public listed companies often use the price-earning (PE) ratio and the earnings per share (EPS) available in news reports and other public information to make their investment decision. One of the useful information that managers convey to shareholders is the dividend payout. Wang, Erickson and Gau (1993) examined the dividend policies of REITs by drawing inferences from the agency-cost theory and tested for the determinants of REIT dividend payout ratios. They studied whether the stock market responds differently to the dividend announcement effects for both equity and mortgage REITs in an asymmetric framework. It is in the interests of shareholders to lower the dividend payouts because it will increase the higher share value of the company. Lenders also prefer to lower the dividend payouts so that the company is able to meet any debts that are due. If the principals exercise control over the dividend payouts, the dividends paid cannot convey any information. On the other hands, signaling theory hypothesizes that investors can infer information about a firm’s future cash flows as a signal of the dividend payouts. Bradley, Capozza and Seguin (1998) explored the role of expected cash flow volatility as a determinant of dividend policy. They showed that dividends paid by REITs are lower when future cash flows are less certain. They concluded that firms with more volatile earnings pay lower dividends. Managers are reluctant to cut dividends so they will not raise dividends unless they are sure that the increase can be maintained. Investors view the increase in dividends as signals of the management view’s of the future. Similarly a cut in dividends would signal that managers are worried about future earnings. This can convey signals of the management views of the future earnings of the company. This study aims to empirically test the relationship between the dividend policies and the stock returns of a firm. We carry out the tests on a sample of listed property firms in Singapore from 1992 to 2002. The methodologies, proposed in both Wang, Erickson and Gau (1993) and Bradley, Capozza and Seguin (1998), which were designed to analyze the effects of dividend policies of REITs, will be applied in this study to examine the effects on property stocks in Singapore. The results show that dividend policies convey information and generally firms pay lower dividends when their future earnings are more volatile. The volatility of earnings is measured by the market value of assets and the leverage ratio of the firms. The test was further carried out using panel data methodology. The results showed the same relationship as determined by the one-period model. The results obtained support the information-based theory of dividend policy but not with agency-cost theory. Key words: Signaling hypothesis, Agency Cost, Dividend Payouts

104

Urban Development and Green Land (Agricultural) Reservation Policy in Iran M.R Pourmohammadi* and R.Ghorbani** Abstract Most Iranian Cities are surrounded by agricultural and farm lands. This situation however, in terms of urban development has become an important issue in recent years. Since urban growth occupies more than 500 ha of agricultural and open lauds every year urban sprawl not only damage environment but also increase ecological, social, economic and planning problems. Public intervention through regulatory measure the like approved by Iranian high council of urban planning only slows down or post ponds the process rather than solving the problems. Different policies including the policy of densification of urban spaces are discussed in this paper. The main purpose is to evaluate the advantage and disadvantages of adopted policies and bring forward some recommendations to make an appropriate policy.

Key words: Orchards, Agricultural land, Urban development ,Urban regulations.

* Associate Professor, Tabriz University, Iran. ** Ph.d student of Tabriz University, Iran.

105

The Service Operations Aspects In Managing High-Rise Commercial Buildings: The Management Operations Concepts Yasmin Mohd Adnan* Abstract Operations management in any service operation deals with a system, which transform a set of inputs into outputs. Thus by understanding the characteristics in any service operations is important as they define the competitive environment of service operations. Any organisation, which manages high-rise commercial buildings, must recognize that the effectiveness and efficiency of their service operations will be the sustaining factor of the long run competitiveness of existence. Concepts in relation to operations management applicable to the management of high-rise office buildings are an added advantage in the pursuit of improving effectiveness and efficiency. Operations management in any service operation deals with a system, which transform a set of inputs into outputs. Recognising these key characteristics will lead the path towards providing ‘service excellence’ required by the industry. This paper looks at the general operations management concepts and examines how these concepts can be applied in the context of the service operational aspects in managing high-rise office buildings. The key service operations characteristics and the different performance objectives identified in the operations management concepts will be highlighted. Taking these objectives into consideration, the performance standards for the various services undertaken for the high rise building management can be drawn.

* Lecturer, Department of Estate Management, Faculty of Built Environment, University of Malaya, Malaysia .Email: [email protected]

106

Discussion on Property Rate and Real Estate Capitalization Rate Weidong Qu* Abstract This article discusses the essence of property rate and real estate capitalization rate and analyzes the relations and differences between them. On the basis of this, further discussion is made to address the possible impact of choosing and applying these two concepts on the income approach, which is one of the classical real estate appraisal approaches. The article finally indicates the significance of accurately understanding both two rates through the real estate appraisal practice in China.

Key words: property rate; real estate capitalization rate; income approach

* Associate Professor, Department of Land & Real Estate Management, The Renmin University of China, Zhongguancun Str. 59, 100872, Beijing, PR China Tel. & Fax: ++86-10-6251 1089 Email: [email protected]

107

Impact of Change of Urban Structure on Housing Price Dynamics: Application of a modified repeat sales model Kim, Jin Yoo and Lee, Chang-Moo Abstract Recently, Seoul Metropolitan Area (SMA) has experienced rapid housing price appreciation. Especially, Gangnam area, southeastern part of Seoul, has been treated as the origin of the price jump by speculation. Therefore, some studies suspect notable parts of the abnormal housing price appreciation as a price bubble. In contrast, others argue that the rapid price increase was caused by fundamentals such as excessive demand. In short, they do not reach a consensus on the existence of price bubble in housing market of SMA, especially Gangnam. Almost all previous studies of SMA housing market have a serious limitation in finding the factors of housing price appreciation. In fact, they skipped the influence of spatial structural change on it even though they consider some spatial factors such as the quality of education. In other words, they have focused on the non-spatial factors such as interest rate and CPI. However, the spatial structural change influences the long-term housing price dynamics by changing the proximity to the employment center. This study examines the impact of change of urban spatial structure on housing price dynamics over the past 10 years by modified repeat sales model and hedonic price model. The results present strong evidence that hosing price change is closely associated with urban spatial structural change, especially the change of employment. In particular, housing price change in the southeastern region of Seoul has been directly influenced by the proximity to the growing employment center, Gangnam. Key Words: Urban Spatial Structure, Repeat Sales Model, Housing Price, Distance Gradient, Seoul Metropolitan Area

* Ph. D. Candidate, Hanyang University, Korea. E-mail: [email protected] ** Professor, Department of Urban Planning, Hanyang University, Korea. E-mail: [email protected]

108

Correlates of Land Value Determinants in Lagos Metropolis, Nigeria L.M. Olayiwola*, O.A. Adeleye1, P.O. Olawuni1 and A.O. Oduwaye Abstract This paper examined the relationship that exists between various land value determinants in metropolitan Lagos, Nigeria. Using factor analysis and principal component techniques, it showed that a high level of co-variation existed between factors of land value such as accessibility, rent, transport improvement, quality of neighbourhood, infrastructural facilities and government regulations. The need for land use planners to consider these land value determinants in putting land into optimum use were highlighted.

Key words Land Use. City. Land Use Pattern. Infrastructural Facilities

* Contact Address, Department of Urban and Regional Planning, Obafemi Awolowo University, Ile-Ife, Nigeria Telephone: 2348033379719 E-mail: [email protected]

109

Obstruction of view and its impact on house prices Shi-Ming YU* and Chee-Hian CHAI Abstract The factors that influence house prices have been well researched. One of these factors is the view that can be seen from the dwelling unit, particularly, high-rise units. Most studies, using multiple regression analysis, show that good views, such as sea view, do enjoy a premium in value. This paper focuses on the impact of the obstruction of view on house prices. Using data from two condominium projects, the study analyses the change in price when a new condominium project, which would obstruct the existing view of units in the two condominiums, was launched. The paper uses intervention analysis to investigate the impact of the obstruction of view on property prices. The results show that the impact will set into the prices of the obstructed development once the construction of the new development begins. In addition, the results show that the impact is of a gradually decreasing function and depresses the prices of the obstructed development by around 7% in the long term. The paper further suggests the implications of information transparency, given that planning information is widely available to developers and potential buyers in Singapore. Key words: obstruction of view, impact on house prices, intervention analysis

* Contact author: Dept of Real Estate, National University of Singapore, 4 Architecture Drive, Singapore 117566. Email: [email protected]

110

Property Investment – Who is qualified to provide investment advice to retail investors? Vincent Mangioni Abstract The provision of investment advice in Australia has remained unregulated until the Financial Services Reform Act of 2001 took full effect on 11 March 2004. Included in these reforms was the defining of “financial product” advice and its potential for application to property investment. The Commonwealth legislative framework in which financial service reforms operate has created an inconsistent dichotomy with the prevailing State legislation governing property professionals. This paper investigates two issues: The hiatus that exists in the qualifications, experience and training of parties holding investment adviser licenses under the new financial services regime, who provide property investment advice to retail investors without qualifications, experience or training in property. The capacity for investment advisers to obtain remuneration from both a client seeking investment advice from them as well as from the financial product provider they recommend their too, provided a full disclosure is made to both parties. As investment objectives evolve as a consideration of the property purchasing process, for both the owner occupier and investors of property, the role of an independent advisor may be required to assist the purchaser / investor in determining their investment objectives and matching those needs to the most suitable property that meet those needs. It is concluded, that this objective is not served by investment advisers under Commonwealth legislation or property professionals under State legislation in Australia.

* Lecturer Property Studies, University of Technology, Sydney, Australia Tel 61 2 9514-8900 Email: Vincent Mangioni

111

Does Dividend Distribution Mitigate Managerial Retrenchment? Chinmoy Ghosh* and C. F. Sirmans Abstract Conflict of interest between shareholders (principal) and managers (agent) is a potential weakness of the modern corporate form. Various monitoring mechanisms – pay for performance compensation schemes, mix of cash compensation and long term compensation, an independent board of directors, market for takeovers, capital structure – have been developed to discipline management and motivate them to maximize shareholder wealth. In addition to these, dividend distribution can serve as a monitoring device by reducing availability of free cash flow, and forcing the firm to the scrutiny of the capital market if it needs to raise funds for investment. We test this hypothesis by examining if the dividend payout of REITs is significantly related to the proxies for monitoring effectiveness. Our analyses indicate that dividend payout, and dividend yield are functions of CEO tenure, CEO ownership of company shares, mix of CEO pay in cash and long term benefits, and debt equity ratio. We interpret these findings to be generally consistent with the hypothesis.

* Both authors at the Center of Real Estate and Urban Economic Studies (CREUES) and the Department of Finance, University of Connecticut, Storrs, CT 06268, USA. Address all correspondence to the first author.

112

Wealth Positioning, Bequest and Timing of Homeownership in Japan Edwin Deutsch, Yoko Moriizumi and Piyush Tiwari Abstract Bequest is an important economic transfer from parents to children and they help in reducing disparities in wealth and consumption. Bequeathed wealth transfers could allow households to purchase homes earlier in life by increasing own equity to meet the downpayment or by cutting saving time. Present paper develops a model to analyze role of bequest on timing of homeownership. Econometrics of duration models is used to estimate time of homeownership in Japan.

113

Economic growth and performance of the housing sector in Hong Kong K. W. Chau and L H T Chui Abstract This study investigates whether economic activities in the real estate sector lead economic growth, and attempts to discover real estate related economic leading indicator(s) for forecasting the performance of the economy. Recent empirical studies (Green, 1997; Coulson and Kim, 2000) in the United States have shown that residential investment leads GDP. This result suggests that the residential sub-sector is a leading sector of the economy, and changes in housing demand are ahead of changes in aggregate demand. Given that the time lag between the decision to invest in residential real estate and the actual realization of the investment is relatively uniform and not too long, changes in residential investment at any point in time represents the market’s response (and therefore the decision to invest at more or less the same point in time) to expected changes in housing demand. In a rational market, expected demand change is, on average, similar to actual demand change. Therefore, changes in residential investments are a good indicator of changes in housing demand, and thus lead economic growth. However, empirical data in Hong Kong may not exhibit the same sort of the lead-lag relationship observed in the U.S., due mainly to the significant variation in the time lag between the decision to invest and the realization of the actual investment across different development projects. This variation in the time lag is due mainly to the restricted land supply and the nature of planning and development control in Hong Kong. Therefore, real estate investments observed at any point in time represent the materialization of investment decisions that were made at significantly different points in time with different demand conditions. This means that changes in real estate investments may not reflect changes in expected demand conditions, and thus are not good predictors of GDP. This study proposes that real estate prices serve a better purpose than real estate investments in predicting aggregate demand. In an efficient market, external shocks that affect demand will be reflected in market prices quickly. Previous studies (Chau, 1996; Brown and Chau, 1997) suggest that Hong Kong’s real estate market (in particular, the residential sub-sector) is very efficient. Therefore, a change in the trend of residential price, instead of residential investment, is expected to lead economic growth. In addition, the wealth effect and forward looking behaviour also suggest that trend of residential price is a leading indicator of GDP in Hong Kong. In this study, empirical tests have been performed to test the lead-lag relationship between GDP, real estate prices, and real estate investments. The results confirm that real estate investments are poor predictors of GDP. This is in sharp contrast to the findings in previous studies in the U.S. On the other hand, the results support the hypothesis that real estate prices are leading indicators of GDP. Residential price is found to be the strongest leading indicator among all real estate prices. This finding is consistent with the previous finding that the residential sub-sector is the most efficient sub-sector of the real estate market due to the relatively high volume of transactions and the homogeneous nature of housing units (mostly apartments) in Hong Kong. Keywords: Economic growth, Leading Indicators, Real Estate Investment, Real Estate Cycle Contact author: K W Chau, Department of Real Estate and Construction, The University of Hong Kong, Pokfulam Road, Hong Hong, fax: 852 – 2559 9457. Email: hrrbckw@hku,hk

114

Rural land price with the development purpose during the urbanization in China Ping Lu* Abstract The determination of rural land price with the development purpose is the key issues in land transaction between rural land and urban land. The paper will discuss the problem of rural land price in Chinese practice, emphasize the particularity and the principle of the rural land valuation than, explain the appraisal model and use the data to test it, and make the suggestion for rural land valuation finally.

Key words: rural land, price, development purpose

* Renmin University of China, Beijing 100872, China. Email: [email protected]

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Economic Forces, Fundamental Variables, and REIT Returns Jinliang Li*, Robert M. Mooradian** and Shiawee X. Yang*** Abstract In this paper, we investigate the information efficiency of the securitized real estate equity market (REITs). We find that the real estate equity market is efficient in terms of incorporating information from the economy and the general stock market. REIT returns exhibit a strong contemporaneous relation to the general stock market returns, but they do not demonstrate lagged dependence. In addition, REITs also provide significant forwardlooking information regarding the economy; REIT performance leads economic performance by at least two quarters. In particular, the income return to real estate is more informative and leads the economy by four quarters. Findings from this paper suggest that the highly concentrated institutional ownership of REITs may explain the REIT market efficiency.

College of Business Administration, 413 Hayden Hall, Northeastern University, Boston, MA 02115, USA * Phone: 617-373-4707. Fax: 617-373-8798. E-mail: [email protected] ** Phone: 617-373-5955. Fax: 617-373-8798. E-mail: [email protected] *** Phone: 617-373-8209. Fax: 617-373-8798. E-mail: [email protected]

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The effect of property management on health and hygiene conditions of apartment buildings in Hong Kong K.W. Chau(1), D.C.W. Ho,(1) H.F. Leung,(1) S.K. Wong,(1) A.K.C. Cheung,(1) S.S.Y. Lau,(2) W.S. Wong,(2) and D.P.Y. Lung(2) Abstract The recent global outbreak of Severe Acute Respiratory Syndrome (SARS) has aroused public concern on environmental health and hygiene. This paper develops a practical assessment scheme for assessing the health and hygiene performance of apartment buildings in Hong Kong. The scheme involves assessing a hierarchy of building factors that have a bearing on environmental qualities, and thus occupants’ health. The building factors can be broadly classified into hardware (building design etc) and software (property management) of apartment buildings. This project develops focuses on the software since it is much more difficult and costly for the owners to change the hardware once the building has been built. A sample of 60 buildings has been surveyed in detail and the quality of property management and related factors has been assessed according to an assessment scheme developed earlier. Each building surveyed will be given a health and hygiene score (HHS) which indicated the quality if management services in securing the clean and healthy environment for the occupants. The study attempts to identify the major observable factors that affect these scores. The results can inform building owners and policy makers on means and policy to improve the living environment. Since the survey and assessment is very time consuming and partially rely on visual inspection. A model for rapid mass assessment of the quality of management serviced in respect of health and hygiene is possible if the identified factors can explain a significant proportion of the variation in the HHS of building in Hong Kong

Keywords: Building performance assessment, health, Hong Kong, hygiene, property management, SARS

Contact author: K W Chau, Department of Real Estate and Construction, The University of Hong Kong, Pokfulam Road, Hong Hong. fax: 852 – 2559 9457. Email: hrrbckw@hku,hk (1)Department of Real Estate and Construction, Faculty of Architecture, The University of Hong Kong (2)Department of Architecture, Faculty of Architecture, The University of Hong Kong

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Micro Housing for Mega Profits and Improved Living in Developing Countries Geeta Mehta* Abstract This paper will propose innovative ways to attract private capital for the low-income housing in developing countries. The poor in developing countries stay poor because the current systems force them to pay more for housing, utilities, credit and almost every thing else. Slums are the effect as well as the cause of abject poverty, hindering achievement of human potential and economic development for all. Applicability of micro credit models to create micro housing, as well as ideas of thought leaders like Hernando De Soto will be discussed. Alterative to existing policies that have relegated low-income housing to the informal sector, resulting in inefficiencies and planning problems will be discussed. The role of governments and other stakeholders in better urban planning with regards to micro housing and infrastructure will also be proposed. Successful examples of micro housing from developed as well as developing countries will also discussed.

Key words: Low income housing, Economics, Urban planning

* Partner: Braden and Metha Archtects, Chairperson: Centre for Urban Innovation, Tokyo, Adjunct Professor: Temple University in Japan, Minami Azabu 3-5-43-360, Minato-Ku, Tokyo 106-0047, T: 3442-5219 F: 344-7550 Email: [email protected]

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A Time - Series Analysis Of Trends In Construction Materials Price Fluctuation In Nigeria Aderemi Y. Adeyemi Abstract In Nigeria, the cost of construction materials only on residential buildings is in the range of 90 to 95% for housing developed by individuals in the low and medium income areas of the urban fringe and in the rural areas. This percentage stands irrespective of the proportion of the locally produced and imported materials used. Individual developers are responsible for the delivery of over 90% of the housing stock in the country through self efforts, communal efforts, use of cheap labour and minimum or non use of consultancy services. However, these developers are handicapped with data and methodologies, for projecting construction materials’ financing needs into the future in order to aid planning. The objective of this paper was to provide a frame work for assessing the future cost of essential construction material components using past trends in materials price fluctuations so that individual developers in particular and other developers (private firm, corporations and government) in general can widen their horizon in the area of financial planning for housing delivery. Data for this research were collected principally from the publications of the Nigerian Institute of Quantity Surveyors, the Federation of the Construction Industry in Nigeria and one of the leading newspapers in the country, the Guardian Newspaper. The data collected were for 23 consecutive years spanning between 1980 and 2002. For the purpose of simplicity, the construction materials were grouped into three, namely: the extractive materials, the locally produced materials and the imported materials. Trend analysis showed that each group of materials exhibited rising cost per year. This rising cost showed high correlation when compared with fluctuations in the exchange rate of the local currency, the Naira, against the United States Dollar. The exchange rate fluctuation was therefore implicated as the major cause of the rising cost of construction materials in the country. The time series regression equations were adjudged, at 95% confidence level, to be reliable predictors of construction material price level change in Nigeria up to the year 2010. Key words: Material price fluctuations, time – series forecast, construction cost projection

* Department of Building, Obafemi Awolowo University, Ile – Ife, Nigeria. E-Mail: ayadeyemi @yahoo.com

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Cost Implications Of Alternative Staircase Design In Residential Buildings Aderemi Y Adeyemi* and Otitoloju R Alli** Abstract Staircase is a functional component of a building; the purpose of which is to allow the flow of traffic to be accommodated between floor levels within the building. Unfortunately, cost studies of various forms of stairs in relation to materials of construction are often overlooked. This stems from the notion that stairs contribute little to total construction cost. This notion is subjective and it not only negates the objectives of elemental cost analysis, it becomes unacceptable when considering low-income houses and the current surging drive towards sustainable housing delivery. This paper examines the cost contribution (construction cost, cost – in – use and the ultimate cost) of 12 types of staircases found in residential buildings in order to determine the effect of shape and materials of construction on their cost,. Data were generated from archival sources such as bills of quantities on past projects and Survey of building materials prices and labour rates in Ile – Ife town. Analysis showed that shape contributes insignificantly to cost variation of wood stairs. While the introduction of curved components on wood stairs decreased cost, it increased cost in the case of concrete stairs. The construction cost of concrete stairs was 2 1\2 times that of wood for straight flight stairs, 4 times for curved flight stairs and 3 times for mixed straight and curved flight stairs. Although, the maintenance cost of wood stair was more than that of reinforced concrete stairs, it was considered the most effective for sustainable housing technology. Key words: Alternative Staircase Design, Cost Reduction, Sustainable Technology.

* Department Of Building, Obafemi Awolowo University, Ile – Ife, Nigeria Email: ayadeyemi @yahoo.com ** Department Of Quantity Surveying, Federal University Of Technology, Akure, Nigeria.

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Risk versus Opportunities: Foreign Real Estate Investments in China Zhengrong ZHAO, Rose Neng LAI* Abstract After China opens her door to the outside world, foreign investors can share the profit from the Chinese real estate markets. However, some foreign investors find that they are facing competitive disadvantages due to the unique situations and characteristics in China. This paper examines some important environmental, social and economic factors, and analyzes their effects, on the real estate investments in China. Specifically, we will focus on the Yangtze River Delta City Circle, which consists of the most heated regional real estate markets of China. The analyses thus concluded can aid investors, particularly foreign investors, in better utilizing investment strategies upon understanding the Chinese real estate markets in general.

* Zhengrong Zhao is graduate student of Faculty of Business Administration, University of Macau, P.O. Box 3001, Macau, China. Rose Neng Lai is Assistant Professor, Faculty of Business Administration, University of Macau, P.O. Box 3001, Macau, China. e-mail: [email protected]. Tel. No.: (853)-397-4744, Fax. : (853)-838-320.

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Institutions in the Shaping of Shanghai’s New Pattern of Office Locations Jieming Zhu*, Loo-Lee Sim and Xing-Quan Zhang Abstract Liberalization and internationalization of financial markets have had profound impact on the international capital flow and consequently on international real estate investment. International diversification in asset investment has become phenomenal as modern portfolio theories indicate its merits of risk reduction and return enhancement. Inward international real estate capital has clearly played a significant role in the development of new Shanghai. This paper is to probe how a new office market of Shanghai is shaped under an evolving institutional framework. A new pattern of office location is collectively created by the central state, local government, reforming state-owned-enterprise and Hong Kong real estate capital. Different players with various priorities and objectives are interested in different locations. The authors argue that though city’s hardware and economy are the fundamentals, Shanghai’s intangible capital in the form of its cultural and historical assets is equally significant in influencing international real estate investment.

* Department of Real Estate, National University of Singapore, 4 Architecture Drive, Singapore 117592. Tel: 65-6874-3422 Fax: 65-6775-5502 Email: Jieming Zhu Email: Zhang Xing Quan ,

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Email: Sim Loo Lee

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The effects of the landscape for living environment n the quality of life of the residents Hung Chia-Yu Abstract Inhabitation is one of the basic demands. Though the selection of location and demand of housing environment are different, the residents need the good quality and high level of housing environment. By the more valuation of landscape, the prices of the dwelling houses nearby the landscape spaces are raised. This is one of the issues that the improvement of the quality of housing environment to promote the quality of life. The purpose of this study is an approach to the effects of the housing landscape environment on the quality of life of the residents. Through the field questionnaire and the statistics analysis of the perception and satisfaction experience derived by the people, that sets up the influencing factors of the functions of housing landscape environment to promote to the quality of life of the residents. Meanwhile, that finds the expectation and demand for housing landscape environment, and the influence of the functions of housing landscape environment on the quality and the selection of the location of housing. Keywords: housing landscape environment、 the quality of life living environment quality of living environment

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The Effects Of Property Development On The Performance Of Listed Property Trusts Tan Yen Keng* Abstract REITs in the US are mainly internally managed, whilst Australian LPTs tended to use an external management structure. However, recent years have seen increasing numbers of LPTs stapling the units in the property trust with shares in the fund management company forming the internalised management LPTs. These stapled-securities structure (internally managed) LPTs are found to outperform their externally managed counterparts. However, the performance analysis of internally managed LPTs is not complete if the effects of property development, which is undertaken by the majority of stapled-securities structure LPTs, is not accounted for. The purpose of this paper is to examine the effects of property development on the performance of LPTs. The performance of property developing LPTs will be contrasted to the non-developing LPTs. To better evaluate the effect of property development, the performance component of property development activity will be stripped out using a risk-adjustment model. Lastly, stapled-securities structure LPT managers will be interviewed to comment on perceived risk and performance related to property development in LPTs.

Key words: Listed Property Trusts (LPTs), property development, stapled-securities structure LPT, performance.

* Contact details: School of Construction, Property and Planning, University of Western Sydney, Locked Bag 1797, Penrith South NSW 1797, Australia. Tel: 61-2-98524161, Fax: 61-2-98524185, Email: [email protected]

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Non-performing loans – a comparative analysis of five countries Richard Peiser and Bing Wang Abstract Non-performing loans (NPLs) present a drag on the economic recovery of countries that must be resolved in order for them to compete successfully in the world economy. Beginning with the United States in the early 1990s, there has been a succession of NPL crises around the world in countries where overbuilding has occurred and there has been an explosion of NPLs backed by real estate. This paper compares the scale of the problem, the approaches, and performance of five countries that are currently in the midst of dealing with their NPL problem: China, Japan, Korea, Taiwan, and Germany. The paper summarizes the results of work by six students who took part in a research seminar on NPLs in the Spring of 2004 at Harvard Design School. Their work highlights the specific issues that each of the five countries has had to face in dealing with their NPL problem. In China, for example, many of the NPLs are backed by state-owned enterprises, the value of which is small compared to the outstanding principal balances. Korea and Taiwan have been aggressive sellers of NPLs, and have been much more successful than the other countries in resolving their NPL problems quickly. The analysis includes summaries of the pricing of NPLs where transaction data has been available. Among the questions of interest are the rate at which prices normalize – how quickly the ratios of NPL sales price to Outstanding Principal Balance rises as investors become more comfortable with the risks in a given country for resolving the loans. We examine the different factors that affect NPL pricing, the institutions established in each country to resolve NPLs, the methods of disposition, the volume of transactions, the players, and local tax, legal, and other policies that affect sales prices. The paper concludes with a summary of the practices that seems to be working best to raise the prices of NPLs and reduce the losses associated with them.

* Email Address: [email protected]

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The Changing Characteristics Of Urban Housing Markets; Problems And Policy Perspectives In India U Arabi* Abstract Housing is an important basic amenity for civilized life. A well planned housing can increase national productivity, economise on urban space and minimize the cost of urban infrastructure. Although housing is a global problem, it is very chronic in the developing world. One of the important problems for the failure of developing countries including India to mitigate the housing problem has been the lack of understanding of the underlying causes, ramifications, dimensions and implications of the problems and the resultant misguided policies and approaches to the problems despite the various the schemes to mitigate the housing problem. The National Commission on Urbanization [1988], has rightly considered the provision of adequate housing as an obligation of a civilized society and it treats housing as a people’s activity. Thus, a policy enabling people to build their own houses for the people than public agencies building houses for the people indeed a recent development in the urban housing market. Further, the relative decline in public investment in urban housing and supply constraints in land and other building materials resulting in enormous housing shortages is more pressing and visible in urban cities. The present crisis in urban housing sector is largely a crisis of ‘inappropriate interventions” by the Government and the legal, administrative and institutional constraints mitigate against the housing initiatives of the people. Thus, all housing action, which presently confined to indeed need drastic revision, reorientation and restructuring. Urban land being an input factor in supply of housing, an appropriate urban land development and distribution policy is required for India. In this connection, to serve both the efficiency and equity goal of urban development and regulate the escalating land prices thereby to ensure increase in house building activities and also to protect the interest of house builders, and appropriate effective international desirable ;by the Urban development authorities. In this contexts, an effort made in this paper, examines the changing characters of urban housing market in developing countries with a special reference to India. Broadly the issues covered includes, the shift in the housing programmes i.e. people oriented, greater amount of private sector participation in house building activities which recognizes the role of builders cum promoters in ensuring smooth supply of urban housing facilities, increased non – institutionalization of the housing finance activities and the need for increased regulatory powers of Urban Development Authorities (UDA) to stabilize the escalating costs of land inputs and other building materials in the urban centres in India. Finally, the policy perspectives advocated in this paper with view to ensure grater degree of public – private participatory approach as a solution to urban housing shortages in the contest of speedy urbanization process in India in the recent years really finds a measures for policy makers in the country.

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* Reader, Dept. of Economics, Mangalore University, Mangalagangothri, Karnataka57419, India

Provision of parking space for low-cost housing in new towns Rosli Said, Faizah Ahmad* and Ibrahim Mohd Ahmad Abstract The increase of private vehicle ownership and usage has drastically increased due to the rapid physical, social and economic development in Malaysia since early 1980’s. The direct impact of the increased number of motor vehicles is the high demand for parking spaces especially in the urban areas. The issue on parking shortage has become worst with the increased development intensity in the inner city. The existing guidelines and standards provided flexibility for the Local Authority but did not underline clear guidelines in interpretation of Local Authority in detailing out those standards according to the specific local criteria. The Planning Standards and Guidelines for Parking prepared by the Federal Town and Country Planning Department (FTCPD) will assist the State and Local Authority, government agencies and statutory bodies as well as the private sector in planning and providing suitable parking space in their development. A few issues identified by FTCPD during the course of preparing these guidelines are; there is an excess supply of parking space especially for commercial land-use, the absence of management and coordination of the existing parking space and one of the main factors for the parking shortage in new towns are parking layout which is not optimized, i.e. the distance of parking to the destination, and inefficient layout. The study has focused on the provision of parking space for low-cost housing in new towns resulted in problems of either over-crowding or under-utilized spaces. Key words: parking space, low-cost housing, planning standards

* Department of Estate Management, Faculty of Built Environment, University of Malaya, 50603 Kuala Lumpur, Malaysia. Tel +603 (79675713), Office (+603-79676821) – Direct line, Office (+603-79675320)

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Mobile phone (+6019-3300546) E-mail : [email protected]

Studies On Termite Hill And Lime As Partial Replacement For Cement In Plastering Kolapo O Olusola* , E A Olanipekun, O Ata and O t Olateju Abstract This study investigated the compressive strength and water absorption capacity of 50x50x50mm mortar cubes made from mixes containing lime, termite hill and cement and sand. Two mix ratios (1:4 and 1:6) and varying binder replacements of cement with lime or termite hill amounting to 0%, 10%, 20%, 30%, 40% and 50% were used. Test results showed that the compressive strength of the mortar cubes increases with age and decreases with increasing percentage replacement of cement with lime and termite hill. However, for mix ratio 1:6 at 20% replacement of cement with either lime or termite hill, all the mortar cubes had the same strength; subsequently, the termite hill exhibited a higher compressive strength. For mix ratio 1:4, mortar cubes made from lime/cement and termite hill/cement mixtures had the same strength at 50% replacement. Generally, water absorption is higher in mixtures containing lime (18.10% and 14.20% for mix ratios 1:6 and 1:4 respectively, both at 50% replacement level) than those containing termite hill (16.10% and 13.02% for mix ratios 1:6 and 1:4 respectively, both at 50% replacement level). Termite hills seem to be promising as a suitable, locally available housing material for plastering. Key words: Compressive strength, plastering, water absorption.

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* Department of Building, Obafemi Awolowo University, Ile-Ife, Nigeria Email:

The Urban Poor and Housing Regeneration in Seoul Seong-Kyu Ha* Abstract In Korea emphasis has been given to the physical factors of obscene and to the economic predicates. Much less attention has been given to social factors and to housing market factors such as tenure shift and residential and neighborhood change. The housing redevelopment projects, particularly Joint Redevelopment Project (JRP), are intended to make profits for developers rather than improve original residents’ housing welfare and such housing has primarily, benefited the middle-income groups. The key issues covered in this paper are: (1) examination of the housing situation and the characteristics of housing poverty; (2) housing regeneration through hypothesized influences or causal relationship; and (3) gentrification-caused displacement in the poor community and policy implications in Seoul. The issue of housing insecurity and inequality arises most acutely in the case of urban redevelopment projects in low-income residential areas. The following questions are raised here: what role has the government played in the housing regeneration process? Who has benefited directly from the redevelopment of substandard housing areas?

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* Department of Urban and Regional Planning, Chung-Ang University, Korea Tel: 82-2-820-6130 Fax: 82-2-813-8069 Postal Address: 304 Shingu Villa, 551-19 Banpo 4 Dong, Seochogu, Seoul, 137-044, Korea. E-mail: [email protected]

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Property Management and Sustainable Development: Sustainable Urban Village Niroj Kumar Mohanty*, Shisher Kumra** and Shirish Sangle*** Abstract The rate of urbanization in India has witnessed tremendous increase in the last two decades. As urbanization increases, so does pressure on urban areas. This situation is especially dramatic in megacities. The phenomenal rise in population of our cities over the past few years have manifested in the acute shortage of dwelling units, which resulted in accumulated pressure on socio economic structure and environmental sustainability. The function of managing land and working, storage, or living space within premises and of managing, maintaining, protecting and disposing property is totally unsustainable in the long run. There is lacuna in terms of widely agreed process in addressing all these issues, which can solve the problem. So we seek to utilize sustainability concept to come up with a model sustainable urban village. It provides a platform for integration of economic, social and environmental aspects in the future strategies and operation of human settlement, with a detailed understanding of local resources conditions and social relationships, among other factors. It will validate the idea of sustainable urban village concept and its different manifestation in India context. In this sense it will also use the sustainable urban village concept in improving the existing property management system.

* Contact Author: Network for Preventive Environmental Management, 301,Samved Sankul, Plot no 2, Temple Road, Civil Lines, Nagpur –440001, India, 1 E mail: [email protected] ** Network for Preventive Environmental Management, 301,Samved Sankul, Plot no 2, Temple Road, Civil Lines, Nagpur –440001, India, E mail: [email protected] *** Industrial Safety and Environmental Management, National Institute of Industrial Engineering (NITIE), Vihar Lake Road, Mumbai-400 087, India. Email: [email protected]

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Small Scale Private Real Estate Business- challenges to the sustainable urbanization: a case study of Khulna city Rezaul Karim* and Kazi Saiful Islam Abstract The small-scale private real estate business is flourishing day by day in Bangladesh. This paper is to identify the causes of the increment of the small-scale private real estate business and its impacts on the urbanization pattern of Khulna city in context of sustainable urban planning. Khulna is the third largest metropolitan and industrial city of Bangladesh. Due to the macroeconomic impact of globalization, the urbanization of the city is suddenly triggered up. To meet the needs of the increasing housing demand, private real estate companies have come forward with their own initiatives. But there is no national policy guideline for this sector. Consequently, haphazard growth of this business is hindering the harmonic growth of the city. This business is growing in expense of deteriorated living environment, high traffic congestion, high land value and house rent etc. The forthcoming global era of Khulna will intensify this problem significantly. This growth is threatening Khulna structure plan. Now the question arises whether organizational, managerial, financial, legal and political setups of Khulna city are strong enough to face these challenges of sustainable urban development under the threat of globalization? Functional cooperation among state, the Civil Society and the Private Sector in the form of sustainable urban governance can solve this problem largely. Key words: Sustainable urbanization, Globalization, Private Real Estate Company

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* Urban and Rural Planning Discipline, Khulna University, Khulna-9208, Bangladesh Email: [email protected] or [email protected]

An alternative basis for the property tax assessment of domestic property: A case study of Northern Ireland Lay Cheng Lim* Peadar Davis, and William McCluskey Abstract The rating system has remained largely unchanged in Northern Ireland since its introduction in 1852, the date of the First General Valuation of Ireland when individual properties were given an individual assessment. While lettings are the most common way of holding property in the business sector, this is not the case for the housing sector. With over 70% of houses now owner occupied, private rented sector represents a very small proportion of housing stock. The domestic sector within Northern Ireland is valued on the basis of rental values prevalent in the late 1960s - for the 1976 Third General Revaluation (the last time domestic property was all revalued). The valuation list is therefore long out of date and there are significant anomalies in the way it distributes the rate burden due to lack of regular revaluations. This means that inequities have built up over the years with the loss of a clear relationship between rate bills and current circumstances. In recognition of the deficiencies within the current system, the Government announced that the existing rating system would be replaced by a tax based on the capital value of domestic properties. This research has been occasioned by the requirement of jurisdictions to examine the basis upon which domestic property is rated and taxed in light of concern regarding the cost, efficiency and fairness of the systems currently employed. The GB jurisdictions use a form of capital value banding under the auspices of the Council Tax, whilst Northern Ireland retains the Net Annual Rental Value basis previously common across the UK and elsewhere in the former British Empires. In the USA, the common basis is discrete capital values, arrived at using complex computer assisted approaches. In order to assess the wider implications of a change to the domestic rating for Northern Ireland, this paper examines the use of capital value system in the taxation of residential property. It examines the options available and the underlying techniques involved in property taxation and utilising a dataset drawn from NI, suggests ways in which current practice can be modified to produce a more acceptable system. The paper provides an insight into the likely redistributive effects on the change in the rating basis which should inform policy makers and those charged with the ultimate decision on the future direction of domestic rating in Northern Ireland. The paper is of relevance not only to the UK scenario but also to policy makers around the world and particularly in developing nations seeking to meet the challenge of establishing a property based tax base.

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Key Words: Northern Ireland, council tax, capital value system, rating, residential property, taxation

* Contact author: Centre for Research on Property and Planning, School of the Built Environment, University of Ulster, Newtownabbey, Country Antrim, Northern Ireland, BT37 0QB, UK. Email: [email protected]

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10th Annual Asian Real Estate Society (AsRES) International Conference 18-21 July 2005 Sydney, Australia First Call for Paper The 10th Asian Real Estate Society International Conference will take place in Sydney, Australia during 18-21 July 2005. The conference will provide a forum for academics, practitioners and policymakers in the areas of real estate market, real estate finance, development and investment, housing and urban planning, urban economics, regulation and government policy to exchange ideas on important issues. In addition to paper sessions covering current theoretical and applied research, the conference will feature special panel discussion sessions on issues in Asia and rest of the world. There will be also Chinese paper sessions in the program. Academics, practitioners and students researching in those areas are invited to submit and present papers at the conference. Timetable 28 February 2005: Submission of abstract 31 March 2005: Confirmation of abstract/Notification to authors 30 April 2005: Conference registration/Hotel Booking 31 May 2005: Submission of Final Paper The abstract should provide the title of the paper and a detailed outline of the research question and methodology. It should also include the names, affiliation, mailing addresses and e-mail addresses of all authors, and designation of contact author. All submission should reach us not later than 28 February 2005. Please submit abstracts or full papers (in English or Chinese) by email preferably in MS word or PDF formats to Dr. Jinu Kim ([email protected]). Jinu Kim Faculty of the Built Environment University of New South Wales Sydney, 2052 Australia

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You are invited to join the Asian Real Estate Society Members will receive International Real Estate Review (formerly the Journal of Asian Real Estate Society), Newsletters, invitation to attend and/or participate in the AsRES conferences, opportunities to link up with other real estate academics and practitioners all over the world through AsRES. Membership due for Year 2004 (Please check the appropriate box) Student: US$10/year Individual: US$30/year Institution Member: US$250/year Corporate Sponsor: US$800/year President's Council: US$2,500/year •

Corporate Sponsor and President's Council will be acknowledged by AsRES through its publications and other activities. Special acknowledgments will be given to President's Council.

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MAIL TO: Asia Real Estate Society 51 Monroe Street, Plaza E-6 Rockville, MD 20850 USA

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