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Means, Motive and Opportunity? Disentangling Client Influence on Performance Measurement Appraisals

Author

Listed:
  • Neil Crosby

    () (School of Real Estate & Planning, University of Reading Business School)

  • Colin Lizieri

    () (School of Real Estate & Planning, University of Reading Business School)

  • Patrick McAllister

    () (School of Real Estate & Planning, University of Reading)

Abstract

This paper investigates the extent to which clients were able to influence performance measurement appraisals during the downturn in commercial property markets that began in the UK during the second half of 2007. The sharp change in market sentiment produced speculation that different client categories were attempting to influence their appraisers in different ways. In particular, it was recognised that the requirement for open-ended funds to meet redemptions gave them strong incentives to ensure that their asset values were marked down to market. Using data supplied by Investment Property Databank, we demonstrate that, indeed, unlisted open ended funds experienced sharper drops in capital values than other fund types in the second half of 2007, after the market turning point. These differences are statistically significant and cannot simply be explained by differences in portfolio composition. Client influence on appraisal forms one possible explanation of the results observed: the different pressures on fund managers resulting in different appraisal outcomes.

Suggested Citation

  • Neil Crosby & Colin Lizieri & Patrick McAllister, 2009. "Means, Motive and Opportunity? Disentangling Client Influence on Performance Measurement Appraisals," Real Estate & Planning Working Papers rep-wp2009-09, Henley Business School, Reading University.
  • Handle: RePEc:rdg:repxwp:rep-wp2009-09
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    File URL: http://www.henley.reading.ac.uk/rep/fulltxt/0909.pdf
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    References listed on IDEAS

    as
    1. Neil Crosby & Cathy Hughes & John Murdoch, 2004. "Influences on secured lending property valuations in the UK," ERES eres2004_116, European Real Estate Society (ERES).
    2. Neil Crosby & Cathy Hughes & John Murdoch, 2004. "Influences on secured lending property valuations in the UK," ERES eres2004_116, European Real Estate Society (ERES).
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    Cited by:

    1. Chihiro Shimizu & W. Erwin Diewert & Kiyohiko G. Nishimura & Tsutomu Watanabe, 2015. "Estimating quality adjusted commercial property price indexes using Japanese REIT data," Journal of Property Research, Taylor & Francis Journals, vol. 32(3), pages 217-239, September.
    2. Diewert, Erwin & Shimizu, Chihiro, 2017. "Alternative Land Price Indexes for Commercial Properties in Tokyo," HIT-REFINED Working Paper Series 75, Institute of Economic Research, Hitotsubashi University.

    More about this item

    Keywords

    Property valuation; client influence; UK;

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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