ETD Collection
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Item Volatility spillover effect between real estate investment trust and financial assets in South Africa(2017) Ndamanomhata, Rosalia N.N.This research examines the dynamics of volatility spillover e ects between the real estate investment trust (REITs) and nancial assets in South Africa. It examined the following nancial assets; bonds, stock, currency and commodities based on selected indices recorded using closing prices. Using the Vector autoregressive and Dynamic Conditional Correlation MGARCH (DCC-MGARCH) model on weekly data from May 2013 to November 2017, there is evidence of both volatility spillover e ects and correlation between assets. In appreciation of existing econometrics applications, a thorough examination of the methodologies available is done to understand how volatility is transmitted between markets and their interdependency from assets over stipulated periods. The dynamic conditional correlation model (DCC-GARCH) is used to examine correlation of variables over time. This research found that correlations are signi cant, and are both negative and positive dependant on the interaction to a particular asset. The assets are not independent of each other due to this their relation proves the existence of spillover e ects. Furthermore, this research sought to establish (based on literature) the degree of spillover e ects to each nancial asset. Results revealed there was a bidirectional volatility spillover between equity and bond markets. The presence of volatility spillover e ects con rms the e ciencies of cross market information transmission and integration of nancial markets of di erent economies. Similarly the e ect of bonds to stock is uni-directional and yield di erent results compared to the relation of stock to bonds in line with similar studies done on emerging economies including South Africa. Results were analysed to determine asset correlation and determine the degree of varying integration which is linked to investors risk premium expectations, cost of borrowing and diversi cation bene ts for investors. Certain class of assets stood out as they were negatively correlated to other assets. Currencies were positively correlated to commodities, and negatively correlated to stocks, real estate stocks and bonds. These results are considered to be good news for managers who are in the business of minimizing risk and examine the optimal portfolio allocations in line with their risk preferences. Based on the correlation, optimal portfolios can be composed using asset substitution that yields the greatest return and less risk. In this regard, negatively correlated securities could produce a diversi cation bene t which reduces risks. Furthermore, the decomposition of the variance of forecast errors over a period of 1-20 weeks as to whether an e ect of shock originates from REITS to other assets. Overall real estate accounts for 0.03 % to 53.43% of uctuations of the forecast error variance for other assets. Using the nancial 15 and industrial 25 as point of reference for stock index for the over examination of externalities; real estate a ects the returns of this index, accounting for 53.47% and while the Pula, palladium and British pound accounts for 3.52%,2.13% of the forecast error variances in for nancial index companies. While the nancials 15 index a ects the returns of other indices as well, contributing 29.68%, 11,60% for real estate and 1,74% for palladium. For Industrial 25, Financials 15 and Reits had the least e ects over time on its return with a decrease in uctuations at 4.08% and 0.56% respectively. Compared to the 1st week, during the 20th week the index returns are increasingly caused by shocks from other assets as its estimation of returns by itself decreases at 6.66%. Which means the returns of the index is not independent of other variables.Item Valuation accurancy in South Africa(2017) Mabuza, Sandile InnocentBackground The perception of inconsistent and uncertain valuations has been the subject of debate worldwide. However, it is a phenomenon that has gone largely ignored in South Africa. The effect of unreliable valuations cannot be overstated, as all lending and investment decisions are based on valuation estimates. Objectives This study seeks to investigate the level of valuation accuracy in South Africa by comparing mortgage valuation estimates done prior to finance of the properties against their actual realised transaction prices. Methods and Results Valuers from four financial institutions as well as from external valuation firms were randomly chosen to participate in a questionnaire and in addition 32,826 properties which were valued and sold between January to December 2016 were also analysed. The valuation estimates and actual transaction prices were collected in an Excel file. While data from the banks and valuers was collected and analysed using Qualtrics. Data was analysed using R software version 3.3.3 to come up with descriptive and inference statistics. The result of the analysis showed that the level of valuation accuracy for the properties in South Africa used in the study is high (2.03%), which shows a very high level of accuracy compared to the adopted benchmark of 10%. The accuracy level across the three provinces in our study namely Gauteng, KwaZulu-Natal and Western Cape is 2.23%, 1.93% and 1.58% respectively, indicating that valuation accuracy is higher in Western Cape than Gauteng and KwaZulu-Natal Conclusion The study revealed that valuation estimates were good proxies of the market value (actual realised sale prices). Based on the 10% acceptable margin of error benchmark adopted by this study it shows that valuers in South Africa are indeed accurate in as far as estimating residential cost values. Based on the 2.03% level of accuracy obtained in this study, we recommend that valuation stakeholders adopt 5% maximum margin of error between valuation estimates and actual realised prices.Item The importance of the non-financial determinants of the lease versus buy decision for corporate office real estate in Johannesburg(2017) Chetty, Jeremy JohnThe objective of this study is to provide empirical support to the study of corporate real estate by classifying and providing proof on the significance of the non-financial determinants of the lease versus buy decision for office real estate in Johannesburg. By means of a logistic regression coupled to the use of a Kruskal-Wallis test, this study sought insight to company characteristics, locational and physical attributes of office real estate that could predict the lease versus buy decision for corporate real estate based on a survey involving 13 companies occupying office real estate located in Johannesburg. The results do not show a positive correlation between company and site specific characteristics. These were not significant predictors of the lease versus buy decision for corporate real estate. The results indicate that the majority of the respondents prefer a combination of leasing and owning versus solely leasing or owning their corporate real estate. The dataset used in this study is based on a survey that was conducted online, which involved 13 companies occupying corporate office real estate. The small sample size affected the confidence level of predicting the outcome of the decision. This paper demonstrates the need for a broader theoretical system to comprehensively investigate the lease versus buy decision for corporate real estate, which is often limited to financial aspects, but should also include locational and physical attributes, real estate economics and it’s alignment to business strategy. This study seeks to provide an empirical contribution to the field of corporate real estate research by presenting proof on the significance of the non-financial determinants of the lease versus buy decision for corporate real estate in Johannesburg. Keywords include: Lease versus buy, Corporate real estate, Corporate strategy, Real estate, Financial modelling, Logistic regression, Kruskal-Wallis test, Likert scale.Item Alternative funding models for redeveloping inner-city Brownfield real estate in South Africa(2016) Marsden, Elliot ManuelSouth African inner-city , through a series of political cycles, social transformations and shifts in local government structures, have undergone significant physical change in a deteriorating direction. This change has largely manifested in the dilapidation of inner-city real estate stock, in that brownfield buildings, or buildings with former residential, commercial and industrial functions, have been re-appropriated for alternative (often illegal) uses that have potential consequences for that redevelopment and, through the sourcing of necessary capital, maybe restored and rehabilitees to better serve inner-city inhabitants and stake holds.Item The influence of the mandate system and the political ideological persuasion on the performance of South Africa's real estate industry(2016) Mgiba, Freddy MarilahimbiluPurpose: The impact of the mandate type used and real estate agents’ ideological outlook on conflict of interests and compromising of principals’ interests together with their effect on the ultimate outcomes has largely been ignored in the South African real estate industry. The purpose of this study was to investigate the effects of dual mandate system and ideology on the outcomes to buyers and sellers of properties. This was achieved by investigating their influence on the conflict of interests and compromising the interests of the principals and how these in turn lead to suboptimal outcomes for the industry. Method: Stratified random sampling was used for information gathering. Data were collected using face-to-face filling in of the survey instrument and 204 participants agreed to take part in the study. Confirmatory factor analysis (CFA) was employed to assess the reliability and validity of the results. Findings: The results reveal that the dual mandate system and ideological persuasion of actors in the real estate industry does positively impact on conflict of interests and also compromises the interests of the principals. Conflict of interests and compromising principals interests have also been found to negatively affect the resultant outcomes for the principals. Practical implications: The dual mandate system should be reconsidered with the view of revising or changing it altogether. Also, practices of real estate agents should be closely monitored by relevant authorities to ensure that they do not disadvantage other consumers. Insights gained from this study provide the basis for future policy-making by government and for academic activity on training of new real estate agents. The findings of this study are expected to assist the Estate Agency Affairs Board (EAAB) as the custodians of licensing of real estate agents. Research limitations: The participants were all from Gauteng Province which might limit generalizability prospects to other provinces. Also, some respondents might have given biased responses by attempting to prove that they were not ignorant of how the industry operates. Key concepts: Dual mandate system, Ideological outlook, Conflict of interests, compromising of principals and Outcomes.Item Antecedents of financial success in post-merger and acquisitions: pursuing corporate entrepreneurship in the South African real estate industry(2016) Makatini, PhumeleleThis study was aimed at investigating what the antecedents are for achieving financial success in post mergers and acquisitions, particularly in the field of commercial property in an emerging economy. This study sought to understand the reasoning and the value addition behind mergers and acquisitions activities in the real estate sector. This paper used empirical research to conduct the investigation of the hypothesised relationship between financial performance and three key independent variables, namely; corporate entrepreneurial culture, resource sharing and infrastructure support. An analysis by testing the hypotheses that predict the relationships of the variables was undertaken through various statistical models. Mergers and acquisitions often take place in entrepreneurially oriented organisations as a means of increasing competitiveness, productivity and growth, therefore this paper tests the financial performance post mergers and acquisitions transactions. It also tests the role of corporate entrepreneurship and corporate culture (corporate entrepreneurial culture) specifically on the impact that it has on financial performance. Understanding the financial performance relationship with other variables is significantly important because it is argued by some researchers that the benefits of mergers and acquisitions sturdily enhance revenue growth through market share, create economies of scale through cost efficient methodologies and often produce tax gains. This paper tests the validity of these theories.