Current fields of research in real estate

Simon Stevenson is Professor of Finance, Course Director MSc Real Estate and MSc Real Estate Investment (Go to Simon Stevenson's Cass Experts entry).

Summary of key points:

Simon Stevenson, Professor of Finance and head of real estate courses at Cass Business School, is heavily engaged in real estate research. Our Press Officer Ben Sawtell asked him about his most current research and its implications for the world of real estate in general. Key concepts included:

  • Real estate asset classes are, because of their size, liquidity and nature as privately traded, different from any other sort of asset class;
  • Real estate Fund Managers have to weigh up liquidity issues and the depth of the market in which they are operating;
  • The US Real Estate Investment Trust (REIT) market was originally a niche market, and has only dramatically expanded at the hands of equity traders;
  • As a result of this expansion, the generic model of the REIT does not necessarily apply to current worldwide markets;
  • Real estate sold through auctions generates a premium on the sale price, but that price is also used as a marketing tool by estate agents.

Q&A transcript:

Ben Sawtell: What makes real estate research so interesting?

Professor Stevenson: It is different, you cannot just take what you use in asset classes, like equities and bonds and currencies, and apply them to real estate. They are divisible, heavily traded asset classes on the stock exchange. They are a privately traded, very liquid, very big sort of asset, so you cannot just take conventional techniques, get some data, run some tests. So there is that kind of almost intellectual curiosity that comes from real estate and that makes you think a bit more and, you know, makes you use your brain a little bit more there.

Q: You are working a lot at the moment on global office real estate cycles. What implications do the findings you have come to so far have for fund managers?