Transcript the 2013 IPD presentation global template

Maturity indicators for emerging real estate markets –
Exemplified by the comparison of the Tanzanian and South African property market maturity
Nora Rothacher, Doctoral Candidate
IREBS University of Regensburg
© Nora Rothacher – ERES 2013
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AGENDA
I.
Background Global Market Indicators,
Benchmarking and Indices
II.
Introduction of Paper Research
III.
Real Estate Market Maturity Paradigm
IV. Strengths/Weaknesses and
Opportunities/Threats of the Tanzanian and
the South African Real Estate Market
V.
Classification of the countries’ property
market maturity and economic evolution
VI. Conclusion
© Nora Rothacher – ERES 2013
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Background Global Market Indicators, Benchmarking and Indices
Global Market Indicators – Differentiation to Benchmarking and Indices
• Indexing in general considers companies with similar assets in the peer
universe; these peers are therefore exposed to similar risks from a
shareholder perspective.
• Goal of indexing
– Performance assessment (like e.g. total return) of investment and
asset management activities which exclude the impact of external
factors, such as property market cycles
– Informing the property investment process (allocation, selection and
management)
 Basis for benchmarking
• The primary goal of benchmarking is the enhancement of particular
products and processes compared to a benchmark ("best in class").
© Nora Rothacher – ERES 2013
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Background Global Market Indicators, Benchmarking and Indices
Global Real Estate Market Indicators for Country Analysis
• IPD global coverage to promote market transparency
by providing overall statements of a country’s investment property return, comparing property returns
with other assets, identifying trends in major market sectors and segments in each country
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Background Global Market Indicators, Benchmarking and Indices
Global Real Estate Market Indicators for Country Analysis
• Economical and Business Factors
– Country Profile
(Location, Historical Background and Socio-Cultural Environment, Political and governmental
framework, Infrastructure)
– Economic and financial environment
(Natural resources, Currency, Industries, Export trade, Income and economic growth, Poverty and
Private consumption, Inflation, Debt position, Financial institutions/Supervisory authorities,
Financial markets)
– Business framework
(Legal security, Bureaucracy, Fiscal system, Subsidies, National commercial partners/chambers of
commerce)
• Real Estate Market Factors
– The rules of the game in the local real estate market
(Market participants and institutions, Transaction process, Residential property market, Commercial
property market, User, Return expectations, Lease structures)
– Risks and opportunities in the local real estate market
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AGENDA
I.
Background Global Market Indicators,
Benchmarking and Indices
II.
Introduction of Paper Research
III.
Real Estate Market Maturity Paradigm
IV. Strengths/Weaknesses and
Opportunities/Threats of the Tanzanian and
the South African Real Estate Market
V.
Classification of the countries’ property
market maturity and economic evolution
VI. Conclusion
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Introduction Paper Research
Overview
• Sub-Saharan Africa
– Diverse geographical, socio-cultural and historical conditions
– Different stages of economic evolution and market maturity
Benchmarking tool ‘Market Maturity’ could close gap between
investment opportunities and low real estate investment activity
• Research Question
– How mature are the real estate markets of Tanzania and South Africa?
• Goal
– Objective analysis & comparison of the real estate market activity in
Tanzania and South Africa
– Assess the countries position on the global real estate maturity curve
– Developing market information in emerging economies
© Nora Rothacher – ERES 2013
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Introduction Paper Research
Methodology
• Framework Property Market Performance:
– ‘Market maturity’ on the basis of Keogh and D'Arcy (1994)
– Emerging market study by Jones Lang LaSalle (2010)
• The methodological emphasis:
o Research of contemporary literature
o Empirical survey
 Objective evaluation of theoretical information
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AGENDA
I.
Background Global Market Indicators,
Benchmarking and Indices
II.
Introduction of Paper Research
III.
Real Estate Market Maturity Paradigm
IV. Strengths/Weaknesses and
Opportunities/Threats of the Tanzanian and
the South African Real Estate Market
V.
Classification of the countries’ property
market maturity and economic evolution
VI. Conclusion
© Nora Rothacher – ERES 2013
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Real Estate Market Maturity Paradigm
Maturity Factors
Market
Transparency
Social factors
Political factors
Legal factors
Robust
domestic and
international
corporate
base
Market
Maturity
Connectivity
with
international
capital
markets
Institutional factors
Commercial
building offer
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AGENDA
I.
Background Global Market Indicators,
Benchmarking and Indices
II.
Introduction of Paper Research
III.
Real Estate Market Maturity Paradigm
IV. Strengths/Weaknesses and
Opportunities/Threats of the Tanzanian and
the South African Real Estate Market
V.
Classification of the countries’ property
market maturity and economic evolution
VI. Conclusion
© Nora Rothacher – ERES 2013
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Measured Fund logo choice (bottom)
Summary
Sources
Tanzania
South Africa
Market transparency
JLL, American Heritage
Foundation, Cushman &
Wakefield, Index of
Economic Freedom, Doing
Business Report,
Not included in the
transparency index
(comparable to Ghana –
90. rank);
Lacks basic investment
performance indices;
Tedious partnership or
business venture process
21. Rank in the
Transparency Index;
Sufficient real estate
networking possibilities;
Performance
measurement of real
estate
Commercial building
offer
Hughes & Arisson Formula,
Knight Frank, Broll
Stable prime yields (10%
in 2012);
Around US$ 3 billion REi
(13% share of GDPi);
Limited high-quality
property stock;
No freehold titles
Prime yields comparable
to value added
investments;
Over US$ 96 billion REi
(31% share of GDPi);
Established core stock of
various property types;
Common land titles exist
(Long leasehold or
freehold )
© Nora Rothacher – ERES 2013
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Strengths/Weaknesses and Opportunities/Threats of the
Tanzanian and the South African Real Estate Market
Investible Commercial Property value
Source: Own Calculations, World Bank
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Strengths and Weaknesses of the Tanzanian and the South
African Real Estate Market
Selected property market characteristics
Source: Doing Business Report
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Measured Fund logo choice (bottom)
Summary
Sources
Tanzania
South Africa
Connectivity with
international
capital markets
OECD, IMF,
National stock
exchange
Limited range of investment vehicles
(non-property related debt securities)
Functioning investment
market;
Diverse range of
investment vehicles (listed
real estate stocks, funds,
debt securities), no REITs
Domestic and
international
corporate base
Porter, AfDB,
World Economic
Forum
Competitiveness
Report
Small corporate base , large informal
sector;
Corruption
Attractive corporate base
(Major MNCs and
domestic corporations);
Infrastructural problems;
Corruption
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AGENDA
I.
Background Global Market Indicators,
Benchmarking and Indices
II.
Introduction of Paper Research
III.
Real Estate Market Maturity Paradigm
IV. Strengths/Weaknesses and
Opportunities/Threats of the Tanzanian and
the South African Real Estate Market
V.
Classification of the countries’ property
market maturity and economic evolution
VI. Conclusion
© Nora Rothacher – ERES 2013
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Classification of the countries’ property market maturity and
economic evolution
Maturity potential of real estate markets via a generic life cycle composition
© Nora Rothacher – ERES 2013
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AGENDA
I.
Background Global Market Indicators,
Benchmarking and Indices
II.
Introduction of Paper Research
III.
Real Estate Market Maturity Paradigm
IV. Strengths/Weaknesses and
Opportunities/Threats of the Tanzanian and
the South African Real Estate Market
V.
Classification of the countries’ property
market maturity and economic evolution
VI. Conclusion
© Nora Rothacher – ERES 2013
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Conclusion
• Great potential in enhancing maturity status in the long-term
• Countries have to expedite reforms and policies (i.e. governance,
business, legal and social systems)
• Governments and aid providing institutions have to insist further on the
adherence of regulations and democratic elections
• Maturity benchmark of real estate markets - an effective tool to evaluate
a specific property market
• Market maturity does not necessarily imply efficiency
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The topic is now up for discussion.
Contact details
Nora Rothacher, B.A. M.Sc.
[email protected]
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