GLOBAL - Valuers will in future have to use more data sources in arriving at their market estimates, but was just one of the points raised at this year's IPD Real World Conference held at the University of Cambridge this week.
"In the current market with little, if any, transaction data valuers would have to look at movements in the listed property markets and property derivatives market," said panelist Dominic Smith, research manager at Land Securities.
Fellow panelist Paul Ogden drew on his past experience of the bond market as he said: "We would never trade a government bond without first looking at trends in bond futures. The same will happen to real estate."
He also commented on the "year-on-year growth in the use of derivatives in one of the toughest markets we have seen."
Ogden recently worked for Bank of America, establishing their property derivatives trading capability, and is currently working on a yet-to-be-announced venture.
The conference also witnessed some upbeat predictions for the development of REITs.
"The REIT sector will grow and specialize, which will both drive economies of scale and make it possible for investors to use REITs as short term tactical allocations," said Dominic Smith, research manager at Land Securities.
"But for this to happen we need more disclosure," he warned.
Andrew Baum, chair of Property Funds Research, claimed this specialisation would drive cross-border mergers of REITs, and suggested this was good news given the EU-REIT is unlikely to become reality soon.
One panelist commented about the "scandal" of fees - the fact that managers have been earning performance fees on the back of the general market performance and gearing.
Conference delegates also learned about developments in property cycles, as Richard Barras, founding partner of data house Property Market Analysis addressed the fundamentals.
"You can't use historical data to forecast because historical situations change, each cycle brings new construction stock and techniques," said Barras.
And Tony Key, professor of real estate economics at Cass Business School also talked about the volatility of real estate.
"A broader investment base with a broader spread of motivations should create more stability, he said.
"Having said that, larger flows of hot money though herding will increase volatility. So overall we will not see an increase in volatility."
An in-depth review of the IPD Real World conference will be published in the November/December edition of IPE Real Estate.