The Anchoring Effect in Real Estate Decisions

The textbook examines the legal and financial aspects of the economy and real estate management, market analysis, real estate, investing (including project financing) and mortgage lending; the essence of development; principles and approaches to effective management of modern real estate, and also questions of technical exploitation and safety of buildings; current issues of taxation of real estate; methods of valuation of real estate. Meets the requirements of Federal state educational standards of higher education of the last generation. Designed for undergraduate students enrolled in fields of study 38.03.01 "Economics" (profile "Economics and management of real estate and investments", "Economy and property management") and 38.03.02 "Management" (specialization "Management of real estate"), as well as for students of other specialties, post-graduate students, teachers, beginners appraisers, analysts, specialists in consulting and a wide range of readers interested in the status and development prospects of the real estate market.

PurposeThis study aims to empirically examine the relationship between real estate and stock market of Pakistan.Design/methodology/approachThe data of two real estate indices (house price index and plot price index) are taken for the Pakistan and its four big cities, i.e. Lahore, Karachi, Rawalpindi and Islamabad. It estimates the integration between series by applying the Johansen cointegration test. Moreover, the vector error correction model is applied to examine the short and long-run causal relationships between series.FindingsThe findings show that the real estate markets are cointegrated with the stock market. They imply that the real estate and stock markets are good substitutes in investment allocation, but investors cannot get the benefit of diversification by making a portfolio of real estate and stock markets in Pakistan. Moreover, the long-run causality is observed from majority house markets to the stock market, whereas short-run causality is evident from majority plot markets to the stock market. Hence, the real estate market leads the stock market in the short run and long run, suggesting the credit-price effect in the majority of real estate markets in Pakistan. These causality results are helpful for investors in the forecasting of real estate and stock markets in Pakistan.Research limitations/implicationsThe limitation of the study is the lower number of observations (107), because house and land prices are only available in monthly frequency from January 2011 in Pakistan.Originality/valueTo the best of the authors’ knowledge, no researcher has investigated the real estate and stock market nexus in Pakistan. Therefore, this study focuses on examining the relationship between the real estate and stock market of Pakistan. The link between real estate and stock markets will provide useful insights to the portfolio managers, real estate companies, property agents, stockbrokers and investors.

Building for a better hospital. Value-adding management & design of healthcare real estate

Real estate brokerage is the activity of matching parties to a real estate transaction. Due to the increasing ease of access to offers posted by sellers and landlords, various challenges in finding solutions that will attract potential customers have appeared before real estate brokers. Given the complexity of the processes in which brokers can participate, the use of modern technologies in real estate brokerage seems to be one way of maintaining and developing the broker industry. The COVID-19 pandemic has caused significant changes in the way brokers operate, forcing them to implement or accelerate the use of modern technologies in customer service. Therefore, the main goal of this article is an attempt to diagnose the use of modern technologies and the types of technologies used in customer service by real estate brokers as a result of the COVID-19 pandemic. The research was conducted in the form of a survey among representatives of the real estate brokerage industry. The answers obtained from the respondents have allowed us to state that real estate agencies use new technologies to a large extent. Over 40% of the interviewees stated that the real estate market has enormous potential for the application of modern technologies. Furthermore, over 70% of the respondents indicated a large or rather large impact of the COVID-19 on the application of modern technologies in the real estate industry. The restrictions related to the epidemic have forced companies to use modern technologies to replace direct contact between the seller and the customer. The research was conducted among real estate brokers in the period between June and October 2020.

In the Netherlands outsourcing management of real estate by institutional investors is not something obvious. Since real estate investment became in use by institutional investors about 1960, investors started their own real estate management departments. Only property management, that is concerned with daily administrative, technical and commercial management as well as maintenance activities, was outsourced to external parties. Meanwhile, these so called real estate management organizations got more professionalized caused by increased experience and changed (real estate) market circumstances. For example, this professionalization finds expression in merging local parties into (inter)national operating real estate management organizations, benchmarking of management performances and standardization of contracts. Nevertheless, the relationship between investor and manager is under pressure. Profit margins are small and real estate investors are still inc lined to think that the services delivered by real estate managers are below standards. The aim of this paper is to investigate whether there are chances for real estate management organizations to reinforce their market position. To answer this question a survey was done among three different types of real estate investors: institutional investors, limited partnerships and private investors. In the survey current outsourcing strategies, future strategies, motives and the opinion about real estate managersí services were questioned. In the conclusions a comparison will be made between outsourcing strategies of different real estate investors. Chances for the real estate management sector are formulated. At the end, the paper reflects on the sector as a whole in relation with other sectors and other countries.

In Korea, brokerage firms have been managing the traditional brokerage commission split model, but the United States has been seeking continuous development of brokerage firms by developing various brokerage commission models for the survival and expansion of brokers. Keller Williams and eXp Realty introduced cloud brokerage to reduce fixed costs, to reduce broker acquisition costs, and incentives to strengthen broker belonging. In particular, there are many implications of the eXp Realty revenue sharing model, which has little initial franchise cost, and is a cloud-based real estate brokerage program that divides profits with expert support without fees for desks and tasks. It encourages start-ups and intermediaries with unique models that give incentives to real estate agents and brokers. It also develops models of three ways in which real estate agents and intermediaries generate revenue, providing real estate sales, revenue sharing and shareholder revenue. It offers a revenue-sharing program that allows real estate agents and brokers to receive both revenue and common stock incentives. In addition, real estate brokers and agents build their own businesses by owning direct equity as shareholders and business partners. In particular, it has revolutionized the existing real estate brokerage model by providing an opportunity for compensation for common stock. Cloud-based brokerage operated by brokers provides maximum value to real estate agents and brokers while building a global brand. The management method of these real estate brokerage firms has many implications for domestic brokerage firms.

Flood maps are commonly used for flood risk communication. Misinterpretation of these maps can lead to over-heightened flood risk perception, with adverse risks for real estate markets. We, therefore, aim to identify an appropriate approach for framing these maps to mitigate such risks. To do this, we carry out five randomised control trials (RCT) in the UK and Pakistan, with each RCT asking a different group of 40 residents in each country to specify their willingness-to-pay (WTP) for coastal residential properties. In the first RCT, we provide no flood risk map. In each subsequent RCT, we provide a flood risk map framed differently. Our flood risk map frames include those with technical language, colour variations, and more accessible risk information. Our findings indicate that real estate demand uncertainty increases in response to flood risk maps, regardless of the framing approach used. We find that there is less WTP for properties in any zones with flood risk information, regardless of whether the risk is very low. This finding indicates that risk aversion takes precedence in real estate decisions under flood risk maps, leading to property devaluation in all flood risk zone categories. We discuss the wider implications of these findings. • Flood risk maps over-heighten flood risk perception. • Public access to these maps increases residential real estate demand uncertainty. • Flood risk maps have implications for property devaluation. • Risk-averse behaviours outweigh framing of these maps.

The main function of the property manager is to realize the property owner's objectives, to generate income for them as well as maintain or increase the value of the investment property. The job of a property manager is complex and requires expertise in a more comprehensive field of real estate. The real estate market which has a direct impact on the job of real estate managers, is a major component of the economy in general. The two are very close where economic performance can cause changes in the real estate market. In order to assess the current and future potential of a particular property and then develop a management plan for it, a property manager must first understand the underlying economic trends and their implications for the real estate market. Only then can the property manager proceed with the steps to develop an efficient and professional management plan. All the activities involved in the marketing of the space to be rented are directed towards a single goal, which is to sign a rental agreement between the owner and the tenant. The role of the property manager in rental management will involve aspects of rent collection, establishing good relations between owners and tenants, coordination between tenant contractors, management of utilities and building services and monitoring the return of the premises to a good condition after the termination or expiration of the rental period.

In the last three years Romanian housing market has boomed, average prices climbing over 300%. A traditional explanation relies on the growing popularity of mortgage finance. Cheaper and less bureaucratic loans have made a house affordable for more households and caused a sharp increase in demand. The inelastic supply and other market imperfections have generated a price bubble. This paper examines three market imperfections that could have facilitated extreme price movements. Firstly there may be a Giffen anomaly in Romanian urban housing market. Secondly, adaptive expectations and a risk-seeker behavior on ownerís side could also have fuelled a price bubble. Last but not least, the prices swiftly climbed due to a poor regulated real-estate brokerage sector prone to moral hazard. Giffen goods have long been a controversial topic to microeconomic theory. Since the publication of Principles of Economics by Alfred Marshall in 1895, the literature has strived (mostly unsuccessfully) for strong empirical evidence. This paper does not attempt either to support or to reject the Giffen hypothesis but rather to appraise the possibility of a fulfillment of standard Giffen preconditions. To the best of our knowledge this is the first application of Giffen theory in real estate markets. Another original contribution is the consideration of an emerging risk-seeker behavior in the housing market of a country whose population largely lacks appropriate investment education. The asymmetric information and the exposure of real estate intermediaries to moral hazard are well known and intensively researched topics. Therefore the original contribution of this paper in this field is some new evidence from a less investigated real estate market, focusing on the linkage between poor regulation and price bubbles. For drawing its conclusions this paper uses formal observations and some statistical evidence. The examination is focused on a sound discussion of relevant facts, data and generally accepted theoretical results. The main application of conclusions is a better understanding of real estate developments in a former-communist emerging market. Thus, these results should enhance the knowledge in this field and help potential investors. A major part of Romanian urban housing market consists of flats in multi-family panel apartment blocks built in the 1970s and 1980s. A legacy of the communist era, these low-quality flats provide poor housing conditions and almost all inhabitants would be happy to leave them. Unfortunately, for most people this is not an option in a country where the housing and heating costs in the winter can reach 80 percent of average income. The few families able to ìescapeî typically have incomes close to the purchasing power of an average Western-European household. Due to poverty and very few affordable new houses, the old flats have almost no substitutes and seem to fulfill standard Giffen preconditions, i.e., they are inferior goods, lacking close substitutes and comprising a substantial percentage of the buyerís income and wealth. Therefore, we conclude that as the prices went up, demand became even stronger causing a further price increase. Another conclusion of the paper is that due to speculative myopia general risk acceptance increased, bringing sellers close to a risk-seeking behavior. Finally we bring strong legal evidence that the real estate brokerage is very poorly regulated in Romania. The consequence is an overcrowded market for these services, the survival fight increasing the moral hazard exposure of intermediaries. In order to boost the fees, real estate brokers have usually persuaded owners and buyers to increase reservation prices.

Housing has a bearing on people's well-being and also social and economic stability. The long-term regulation mechanism of real estate market in China requires timely warning and guiding of market changes and carrying on accurate analysis to the market situation. This article provides a spatio-temporal big data decision support system with collection for real estate related data, such as land, housing and financial market, macro statistics data such as population, society, economy, and other information such as real estate policy and public opinion. The established real estate analysis and decision support system has 4 layers including data layer, indicator and model layer, knowledge layer and application layer. The actual application of the system shows that it is helpful to carry out dynamic monitoring, analysis and evaluation of the real estate market, and it provides supports for the government regulation of the national real estate market and also the land supply policy formulation.

This article explores lessons to be learned from three different healthcare systems and the possible implications for the management of healthcare real estate, in particular in connection to the Dutch system. It discusses similarities and differences among the different systems, in search of possible consequences on cost, financing, and design innovation. To keep healthcare affordable in the future, the Dutch government is currently in the process of changing legislation to move from a centrally directed system to a so-called regulated market system. The deregulation of real estate investment that accompanies the new healthcare delivery system offers healthcare organizations new opportunities, but also more responsibility and greater risk in return on investment. Consequently, healthcare organizations must find new methods of financing. Private investment is one of the options. Three healthcare systems were analyzed on the basis of a literature review and document analysis, then schematized to show similarities and dissimilarities with regard to private investment in hospitals. Observations are based on a selection of recently published articles on private-sector financing and its implications for healthcare real estate decision making in the Netherlands, the United Kingdom, and Germany. The strengths and weaknesses of three healthcare systems with differing proportions of private and public investment in hospitals were explored. Research revealed a gap between intended effects and actual effects with regard to quality and cost. Costly private finance does not necessarily lead to "value for money." Transferring real estate decisions to private investors decreases the influence of the healthcare organization on future costs and quality. The three healthcare systems show substantial differences between public and private responsibilities. Less governmental involvement affords both opportunities and risks for hospitals. Private investment may lead to innovation, improved efficiency, and cost reduction, provided that the costs and benefits of decisions are not separated between different stakeholders. A missing link between infrastructure provision and healthcare delivery may impede design innovation and optimal adaptation to work processes and could lead to an inefficient allocation of risks and benefits.

The purpose of this chapter is to provide analysis of real estate brokerage practices in relation to the National Association of Realtors’ Code of Ethics and Standards of Practice and legislated standards of practice in the state of Iowa. This study investigates the relationship between real estate brokerage practices in Iowa and demographic factors such as age, income, and educational background. It utilizes data gathered from a survey questionnaire administered to a random sample of 300 real estate agents and brokers who are members of the Greater Des Moines Board of Realtors. The results of this investigation show that ethical judgment by real estate brokers may vary according to level of education, income, and sex of the selling agent. Age and whether part-time or full-time real estate brokerage work status did not appear to be significant in terms of altering ethical decisions.KeywordsReal EstatePractice StatementHousehold CompositionDisclosure StatementPractice QuestionThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Where will China's real estate market go under the economy's new normal?

The paper presents theoretical and methodological approaches to forecasting pricing in the real estate market based on the study of stochastic models of time series, which are statistical samples of prices of real estate in certain segments of this market generated consistently over time. The main stages of the research of time series in the real estate market are given. Two main components of time series of real estate prices are distinguished - fundamental (regular) and random (irregular). The fundamental (regular) component of the time series contains trend, cyclical and seasonal trends. The random component is noise, which slightly deviates the value of the time series from the trend. The work analyzed the fundamental price-forming factors in the real estate market, which have the greatest influence on the formation of the real estate price and determine its trend. The results of the analysis of time series of prices on the secondary real estate market in the traditionally most active business cities of Ukraine (Kyiv, Kharkiv, Dnipro, Odesa, Lviv, Ivano-Frankivsk) in the period 2016-2023 are presented. It is shown that prices on regional real estate markets are formed under the influence of both general trends throughout the country and random crisis phenomena inherent in this region. In the regional section of the analyzed real estate markets, on average, a growing trend is observed, which is stimulated by the increasing solvent demand for residential square meters. At the same time, it is of particular interest to study the behavior of real estate market prices during periods of crises caused by extraordinary events and conditions (pandemic and war) observed in 2020, 2022 and in the current year 2023. If the coronavirus, as a crisis phenomenon, affected the dynamics of regional real estate markets more or less equally, then the impact of a full-scale war manifested itself differently in different regions of our country. In front-line cities that suffer quite a lot from shelling (for example, Kharkiv), the real estate market reacted by lowering prices and demand. At the same time, in the western regions (for example, Lviv, Ivano-Frankivsk), the cost of square meters has increased significantly, which is due to a sharp increase in demand due to temporarily displaced and evacuated persons. Further directions of time series research for forecasting pricing in the real estate market have been determined.

PurposeThis paper aims to introduce a practical expert decision support system (EDSS) for performing location analysis and making real estate location decisions in the organization’s facility and real estate management (FREM) department in presence of several decision criteria, under risk and uncertainty. This tool is particularly useful for making strategic decisions in facility planning, portfolio management, investment appraisal, development project evaluations and deciding on usage possibilities in an unbiased, objective manner.Design/methodology/approachThe proposed EDSS uses fuzzy logic and uncertainty theory as two of the most useful tools to deal with uncertainties involved in the problem environment. The system performs an unbiased mathematical analysis on the input data provided by the decision-maker, using a combination of Analytical Hierarchy Process (AHP) and Global Criterion Method; determines a suitable compromise level between the objectives; and delivers a set of locations that complies best with the outlined desires of the management as the final solution. The application of the system is tested on a real case and has delivered satisfactory results.FindingsThe proposed EDSS took the defined objectives, the list of alternative locations, and their attributes as the required input for problem-solving, and used a combination of AHP, Possibilistic approach, and global criterion method to solve the problem. The delivered outcome was a set of proper locations with the right attributes to meet all objectives of the organization at a satisfactory level, confirmed by the problem owners.Originality/valueThe application of such a system with such a degree of preciseness and complexity has been very limited in the literature. The system designed in this study is an Industry 4.0 decision making tool. For designing this system several body of knowledge are used. The present study is particularly useful for making strategic decisions in the domains of portfolio management, investment appraisal, project development evaluations and deciding on property usage possibilities. The proposed EDSS takes the information provided by the experts in the field (through qualitative and quantitative data collecting) as the inputs and operates as an objective decision-making tool using several bodies of knowledge considering the trends and developments in the world of FREM. The strong scientific method used in the core of the proposed EDSS guarantees a highly accurate result.