prof. dr. andreas pfnür dr. annette kämpf-dern department of law and economics

24.04.23 | TU Darmstadt | Andreas Pfnür, Annettte Kämpf-Dern | 1

The role of perspectives and behavioural assumptions as family resemblances. Another round in creating a typology of Real Estate Business Research

Eindhoven, April 2011

Prof. Dr. Andreas Pfnür Dr. Annette Kämpf-Dern

Department of Law and EconomicsChair of Real Estate Business AdministrationHochschulstraße 1, 64289 DarmstadtTel. ++ 49 (0) 61 51 / 16 - 37 17Fax.++ 49 (0) 61 51 / 16 - 44 17E-mail: [email protected]: www.immobilien-forschung.de

The following is work in progress

Comments are higly welcome!


Problem

1. Purpose: creating a typological order of real estate (business) research, to…

… evaluate research agendas: Do they fit their purpose? Are they complete?

… create synergies between agendas and avoid duplications of work

… built structures of real estate research organizations and networks

2. Challenge: completeness and taxonomy

What is the “naturally given” structure of real estate (business) research?

Without a doubt: taxonomic top-down approaches to break down research in a unique way have failed

More promising: cluster frameworks. But defining clusters is far away from trivial and also often far away from reality. Especially Due to the complexity of real estate business the cluster centers and boundaries are hard to define.

3. NOT in our focus: neither distinguish different research intensities, nor to track research agendas over time


Scope of this paper – What is real estate business research and what is not?

• What do all objects belonging to „Research in Real Estate Business“ do have in common?

necessary and sufficient!

1. Method: Scientific Research

2. Object of knowledge: Economics / Business Administration / Management

3. Object of experience: Real Estate / Real Property


I. Brief literature overview


Existing literature dealing with taxonomies of real estate topics

Brown (1979) - identify the most activating scientific real estate topics by an us survey (delphi study)

Lahey, Webb (1987) - Reflecting real estate curricula

Johnson, Roulac, and Followill (JRER, 1996) – identify the 16 most frequently presented topics at ARES annual meetings

Black, Carn, Diaz and Rabianski (1996) - Reflecting real estate curricula

Jud (JRER, 1996) – identifies ten distinct subject areas covered in JRER from 1986 through 1995

Rabianski, Black (JREPE, 1999) – identify the most activating scientific real estate topics by an international survey (delphi study)

Dombrow and Turnball (JREFE, 2004) – develop nine topics by manually evaluating each paper published in JREFE and REE from 1988 through 2001

Winson-Geideman and Evangelopoulos (2011) – indentify the 25 most frequently covered topics published in JREFE, JRER, REE


How can real estate topics be separated and clustered?Bottom up

1.Empirical survey

2.Reflecting real estate curicula

3.Bibliometrics (citation analysis) -> Analysis is difficult, because RE research is too young and still fragmented

Cozitation

Bibliographic coupling between scientific papers

4.“Hands on”

5.Semantics -> Problem: RE research is too young and still fragmented

Latent Semantic Analysis (LSA)

6.Combination of methods (1. to 5.)

Top Down

1.Theoretical constructive: Family resemblances


Critical discussion of methods to structure fields of scientific research on an ex-post basis

• Ex post analysis of existing research papers intend different purposes

• E.g. tracing research trends

• Ex-post analysis is hardly inspiring. It is following beaten tracks, without being complete or compulsory effective (bottom up approach)• High-quality scientific research has to be falsifiable, therefore innovations are added to

existing knowledge and bodies of literature

• Composition of existing knowledge is rarely called into question

• Trend to inbreeding

• Height of perspective must be increased, to identify coherences of different contents and blank areas (top down approach)

• Target: Re-composition of existing knowledge

• Result: (re-)defined meta structure of the field of research


II. Concept


What are family resemblances?

• Philosophical idea of Ludwig Wittgenstein (1953)

• Used to create non bidirectional taxonomic classifications (monothetic)

• Describe cluster building equivalence relations (reflexive, symmetric, transitive)

• Often discussed if classification processes are polythetic (set of objects in overlapping categories)

• Family resemblances describe necessary but not sufficient attributes of objects

• Family resemblances are exact in necessary conditions and inexact in sufficient conditions

• No exact, but existing boundaries

• Fuzzy category boundaries

• Measure: distance to a central prototype of a category

• Why is the Wittgenstein‘s theory useful to cluster real estate research?

• Due to the complexity of real estate research cluster boundaries are hard to define

• The „clusters“ of real estate (business) research are highly fuzzy


Common attributes for family resemblances in the economic research

• To create a simple and distinct typology the attributes of the research objects need to be carefully selected

• In real estate research prevalent, but – in the discussed context - with low explanatory power

• „Real estate business function“

• „segment of value chain “

• „type of real estate“

• „research methodology“

• In contrast to common approaches

• „research subjects perspective“ and

• „reserach subjects behavioural assumption“


Derivation of attributes for family resemblan-ces: 3 economic purposes of real estate

1. Real Estate as a resource in the production process

Real Estate as an input in the physical transformation process

2. Real Estate / Real Estate Service as an result of a procduction process

Real Estate / Real Estate Service is an outcome of a physical tranformation process

3. Real Estate as an investment / financial asset

Physical Real Estate has initiated a financial tranformation process


If real estate fulfills 3 economic purposes, then there are 3 different perspectives

1. Real estate as a ressource in the production process

1. Real estate / real estate services as an outcome of production

1. Mapping the real estate production process in a financial transformation process

User

Owner

Producer

3 different families, each

with strong resemblances


Backup: Relationship between perspectives and economic subjects must not necessarily be 1 : 1

User

Owner

Producer

Real Estate 1 Real Estate 2 Real Estate 3

Owner-occupierOwner/occu-pier/producer

Example Insurance comp., Bank

Construction company

Real Estate 4

Occupier-producer

Developer for own portfolio

Explanation

Construction company

Open ended funds


If there are different perspectives, there should be different behaviour of economic subjects

User

Owner

Producer

Perspectives Behavioural assumption (Example)

Ressource productivity max. !

Profit margin max. !

Market value of equity max. !

3 different families, each

with strong resemblances


Uniqueness of real estate as economic good: 3 target perspectives of similar strength

User (Ressource)

Owner(Investment)

Producer(planing, creating, operating, disposing)

Magic Triangle of Real Estate Business Research

Real Estate



User (Ressource)

Owner(Investment)



Real Estate



User (Ressource)

Owner(Investment)


Gold

Real Estate




User (Ressource)

Owner(Investment)


Gold

Real Estate Debt




User (Ressource)

Owner(Investment)


Truck

Gold

Real Estate Debt



Scientific traditions can be incommensurable (Kuhn, Feyerabend). In our case this is likely!

Incommensurability of behavioural assumption!

B U T

It is one and the same real estate!

Problem

Without coordination, no efficiency in real estate

economics

User

Owner

Producer

Perspectives Behavioural assumption (Example)

Ressource productivity max. !

Profit margin max. !

Market value of equity max. !


Why integrating the different research families?

Because of sustainability, in this context especially: economic sustainability

• Small room to maneuver

• Real estate are long-lasting and inflexible economic goods

• Barely short-term change possibilities of real estate plans

• Succesful real estate management imply to meet high compliance requirements

Real Estate is not only an economic good, but also a natural / social habitat

Planing, construction, investment and utilization of real estate are subject to strict regulations in administrative law and rules of the society


One real estate world, three scientific families – need for integration

• Inefficient real estate planing on the owner side

• Bankruptcy risk -> shortfall in payment on the producer side

• Real estate price bubble -> exorbitant occupancy costs on the user side

• Etc.• Inefficient real estate planing on the user side

• Users have low willingness-to-pay -> low rate of return on the owner side

• Inaccurate utilazation of real estate -> higher operating costs on the producers (here: real estate service) side

• Etc.

• Inefficient real estate planing on the producer side

• No lifecycle-costing -> higher costs on the owner and user side

• No ecologic sustainability -> Compliance problems on the owner and user side

• Etc.


The World is not a disc (Phytagoras) – but real estate business research is!

Maximization of capital value invested in real estate

Maximization of profit from producing real estate and real estate services

Maximization of cost-benefit ratio of real estate ressources

Source: Pfnür (2011)

E.g. project- and process management in planing,

construction, operation and marketing

E.g.InstitutionalReal Estate ManagementReal Estate as

an object of experience

E.g.Public /

Corporate Real Estate

Management(narrow sense)


III. Application and results


Paper topics

Research Methods

REITs

Brokerage and agency

Portfolio, risk, diversification

Options

Urban Land

Default and foreclosure

Home-ownership

Market-integration

Office property

Lending

Policies and regulation

Rent

Corporate Real Estate

Apraisal

Tax

Indices

Capital and leverage

Adjustable mortgage

rates

Inflation

Brokerage industry

Journals, publications and authors

Retail

Auctions

Leases

Others:

Data• 2526 articles• 1973 - 2010• JREFE, JRER, REE• 25 factor modell • Latent Semantic Analysis

Source: Winson-Geideman/Evangelopoulos, ARES 2011


Conference Topics (1/2) ERES 2011, by sessions

Ethics

Office RE strategies

Finance & Inv. (4)

Others:

Housing Markets (6)

Valuation (3)

Shopping Centers (2)

Housing Finance

Land Economics

FM & Place mgt.

Property mgt. (2)

Urban Dev. & Prop. value

Green Buildings & Valuation

Market Research & Forecasting (3)

Price Determin. Housing

Property rights

REITs (2)

CREM (3)

Housing Policy

Development

Behavioural Studies in

Green Buildings & Env. Policies

Housing Policy and urban renewal

Housing and market research

Risk mgt.

Development, Regeneration &

Valuation Green Buildings & Policies (2)

Ethnicity, lifestyle and behaviour

Low income housing

Urban Economics

Int. markets

Green offices

Real estate education

User‘s Perspective

Owner‘s Perspective

Producer‘s Perspective


Conference Topics (2/2)ARES 2011, by sessions

Education (9)

Others:

Externality Measuerement (2)

Div.

Brokerage and Transactions

REITs (4)

International RE (2)

Government, div. (8)

Housing (3)

Sustainable RE and Dev. (4)

Urban Growth (3)

Appraisal and Valuation

Commercial RE (4)

Int. Market Evaluation

Spatial Econ., Market interdependencies

Portfolio mgt. & dynamics

Indices

Spatial Analysis, GIS

User‘s Perspective

Owner‘s Perspective

Producer‘s Perspective


Journals

JRER

JREFE

JERER

JREPM

REE

JFM Real Estate Business Research

JCRE


There is no real estate value chain, but a real estate value system

Random selection of real estate management disciplines

(research subfamilies)

Real Estate Business Research

Asset- management

Investment- management

Property- management

Project-development

Facility-management

Project- management

Site management

Ressource management

Marketing

Workplace management


Concluding remarks

• There is a strong need to integrate the 3 perspectives for economic sustainable management of real estate

• Probably the 3 scientific real estate families are not (enough) integrated yet

• “Real Estate Finance” on the one hand side and “Sustainable Real Estate” may not be enough and adequate research families

• Last financial crisis has revealed what happens, if one perspective (owner) becomes too dominant

• Probably the scientific real estate community knows too little about the economies of utilization and production of real estate and real estate services

• At the target: much broader “Common Body of Knowledge” for real estate business research containing a highly inter-family networked research from

1.the owner’s perspective

2.the producer’s perspective

3.the user’s perspective


The role of perspectives and behavioural assumptions as family resemblances. Another round in creating a typology of Real Estate Business Research

Eindhoven, April 2011

Prof. Dr. Andreas Pfnür Dr. Annette Kämpf-Dern

Department of Law and EconomicsChair of Real Estate Business AdministrationHochschulstraße 1, 64289 DarmstadtTel. ++ 49 (0) 61 51 / 16 - 37 17Fax.++ 49 (0) 61 51 / 16 - 44 17E-mail: [email protected]: www.immobilien-forschung.de


Forschungscenter Betriebliche Immobilien-wirtschaft (FBI): Research one brick ahead!

Further information: www.immobilien-forschung.de

prof. dr. andreas pfnür dr. annette kämpf-dern department of law and economics

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