Homogeneous Commercial Property Market Groupings and Portfolio Construction in the United Kingdom

Foort Hamelink, Martin Hoesli, Colin Lizieri and Bryan D MacGregor
Additional contact information
Foort Hamelink: Department of Finance, Tilburg University, PO Box 90153, 5000 LE Tilburg, The Netherlands
Bryan D MacGregor: Centre for Property Research, Department of Land Economy, University of Aberdeen, St Mary's, King's College, Old Aberdeen AB24 3UF, Scotland

Environment and Planning A, 2000, vol. 32, issue 2, 323-344

Abstract: Property portfolios are traditionally constructed by diversifying across geographical areas, property types, or a combination of both. In the United Kingdom it is normal practice to use regions rather than towns or local market areas as the geographical divisions. The authors use cluster analysis to construct homogeneous groups from 157 UK local markets, by means of commercial property returns. The results show strong property-type dimensions and only very broad geographical dimensions in the clusters. These clusters are found, in general, to have temporal stability with changes in cluster membership being explained by the changing economic geography of the United Kingdom. The cluster-derived groupings are used to derive efficient investment frontiers and are compared with frontiers based on conventional heuristic groupings. It is shown that strategies based on parsimonious cluster-based groupings, appropriate for smaller investors, generate results that are comparable with those of conventional groupings and capture the main drivers of property performance.

Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1068/a31146 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:envira:v:32:y:2000:i:2:p:323-344

DOI: 10.1068/a31146

Access Statistics for this article

More articles in Environment and Planning A
Bibliographic data for series maintained by SAGE Publications ().