Maestros and mythologies: some lockdown reflections
| DOI | https://doi.org/10.1108/JPIF-06-2020-0070 |
| Pages | 38-43 |
| Date | 17 July 2020 |
| Published date | 17 July 2020 |
| Subject Matter | Property management & built environment,Real estate & property,Property valuation & finance |
| Author | Colin Lizieri |
Maestros and mythologies: some
lockdown reflections
Colin Lizieri
Department of Land Economy, University of Cambridge, Cambridge, UK
Abstract
Purpose –The paper reflects upon the tendency of participants in the commercialreal estate markets to give
excess status to individuals in decision-making and to hold beliefs that are at best weakly supported
empirically.
Design/methodology/approach –The paper is reflexive in nature, using experiential reflection to consider
institutional processes in the real estate market. It is important to use “methodology”correctly and not as a
synonym of “method”.
Findings –Using reflexive mode, the paper does not have “findings”as such: if the views expressed are
accepted, then a research agenda to understand decision-making processes is implied.
Research limitations/implications–The nature of reflection is that it follows from the writer’s experiential
processes and interpretations. The reader may come from a different stance. Broadly accepting the
propositions points to the need for a contextual analysis of decision-making processes in private real estate and
consideration of the implications of privileging individual idiosyncratic decisions over analytic procedures.
Practicalimplications –Prior research has demonstrated the lack of a back-testing culture in real estate that
would allow empirical analysis of the consequences of “gut feel”decisions overriding modelled analysis;
further, entrenched beliefs about the drivers of market performance might result in misallocation of resources.
Social implications –Resource allocation in commercial real estate has important consequences for land use
and urban and regional development.
Originality/value –The paper reflects the views and experience of the author based on over 30 years of
research into commercial real estate.
Keywords Performance measurement, Decision-making, Behaviour, Uncertainty, Risk and return,
Investment strategy
Paper type Viewpoint
The Taskbar signals another email arriving, probably the latest “impact of CoViD-19”
thoughts of one of the research departments in real estate or financial service firms around
the world. At least they have partly stemmed the tide of prop-tech and Brexit impact emails.
They predict the end of the conventional office or the resurgence of demand for offices; the
decline of large cities or a further concentration of business; V-shaped, U-shaped, W-shaped
and L-shaped economic recovery; flat or rising interest rates, flat or rising inflation rates;
student housing is resilient to the new market environment or highly vulnerable to travel
restrictions; residential markets will recover quickly or remain in stasis, with rises (or falls)
focussed in suburban areas (or city centres or small towns) ...Some have a cautious, nuanced
tone, others are more confident, seem more sure of their prognosis. Given the disparity in the
predictions, what information, in aggregate, do they convey?
Major events such as the pandemic or the global financial crisis (and the long asset
market boom/bubble that preceded it) are characterised by high degrees of uncertainty. We
cannot be sure if the models and relationships that held before the event will hold
afterwards, whether or not they represent a structural break. To an extent, the outcomes,
observed from within the event, are definitionally “unknowable”and, while path
dependent, the actual course may be determined by random events. Realistically, all we
can do is to set out scenarios, perhaps assign rough probabilities to their occurrence. How,
then, can all these documents be so certain? What insights do their authors have? Some may
come from advanced market information, from early knowledge of the decisions of clients
JPIF
39,1
38
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1463-578X.htm
Received 21 June 2020
Revised 22 June 2020
Accepted 22 June 2020
Journal of Property Investment &
Finance
Vol. 39 No. 1, 2021
pp. 38-43
© Emerald Publishing Limited
1463-578X
DOI 10.1108/JPIF-06-2020-0070
To continue reading
Request your trial