At the recent 22^nd American Real Estate Society Annual Meeting held during April 2006 in Florida, USA, DRE staff and students were honored with 2 Best-Manuscript prizes.

The paper by Dr Kwame Addae-Dapaah, Prof James Webb, Assoc Prof David Ho and Ms Tan Yan Fen on “Industrial Real Estate Investment: Does the Contrarian Strategy Work?” won the best manuscript prize in the “Industrial” category. Using industrial real estate investment return data from 1985Q1 to 2005Q3 for US and selected Asia-Pacific cities, their paper uses the value-growth paradigm to examine the relative superiority of “value” and “growth” industrial real estate investment. The results show that “value” industrial property investment outperformed “growth” industrial property investment in all the holding periods under consideration. Furthermore the industrial property investments exhibit return reversal. This implies that the superiority of the contrarian strategy is sustainable. The results of stochastic dominance test validate the relative superiority of “value” over “growth” industrial property investment. The paper therefore concludes that fund managers who traditionally have been favoring prime (i.e. growth) industrial property investment may have to reconsider their investment strategy if they want to maximize their return.

Conferred the best-manuscript prize in the “Valuation” category, the paper by Assoc Prof Joseph Ooi and Mr Lee Sze Teck on “Price Discovery between Residential Land and Housing Markets” examines the relationship between residential land and house prices. It tests 2 competing hypotheses on whether high land prices in urban areas cause high property prices or whether high property prices lead to high land prices. The former hypothesis is based on the neoclassical theory of land rent, whilst the latter is based on the Ricardian rent theory. After constructing a constant-quality price index for urban land based on hedonic methodology, a cointegration analysis is then carried out between the urban land price index and the residential property price index. The evidence suggests that the two series are cointegrated in the long run. The empirical results modeled in an error-correction framework indicate that Granger causality runs from the housing market to the land market, which is consistent with the Ricardian rent theory. The study did not find any causality relationship from the land market to the housing market, thus suggesting that price movements in the land market do not necessarily filter down to high housing costs.