Investigating the Factors Affecting the Investment Decision in Residential Development

INVESTIGATING THE FACTORS AFFECTING THE INVESTMENT DECISION IN RESIDENTIAL DEVELOPMENTBy NARANG SOMIL 2007 An Individual Management report presented in part consideration for the degree of MBA (Finance) Factors affecting investment decision in residential development 2007 Acknowledgements I would like to extend my sincere gratitude to the project supervisor Bob Berry for his guidance, valuable comments and support throughout this project. I would also like to thank Andrea Richardson for giving me the company project through where I got the motivation to do research on this topic. I appreciate all the help extended by her. Finally I would like to thank all the survey respondents for expressing their opinions on the management service and affordable housing obligations which helped me in coming up with good findings. We hope the conclusions drawn in this report will assist Southreef Properties Ltd in future or any developer and would be of help to understand the factors affecting the purchase decision in a Residential Development. I would like to dedicate this project to my sweet younger brother, who motivated me throughout the project. I would also like to dedicate this project to my family and Maa. Finally I would like to take this opportunity to thank my MBA course members, lecturers and other staff for making this year a truly memorable experience. Page 2 Factors affecting investment decision in residential development 2007 Abstract The purpose of this project is to provide a rare insight into the motivation behind residential property investors when looking to purchase an apartment. The factors driving demand preferences for housing are constantly changing, difficult to measure, and often deemed to be a complex bundle of attributes. The project attempts to answer the following questions: What are the factors affecting the investment decision in a Residential Development? To identify the significance and weight of such factors in the decision making process. To what extent the rise in interest rates affect the customer’s decision of different income profiles in purchasing a residential apartment? The project is organized as follows. It starts with a brief outline of previous studies and literature on rational decision making and bounded rationality framework in the investment decision making. The literature review is followed by the primary data collection through two questionnaires to examine the significant factors affecting the investment decision making. The study uses factor analyses to understand the cluster of factors affecting the investment decision of people of different income profiles and regression analysis to identify the effect of rise in interest rates on people of different income groups. The study involves two hypotheses, first relates to the importance of Onsite management and second relates to the effect of interest rates on the investment decision. Page 3 Factors affecting investment decision in residential development 2007 CONTENTS Chapter 1: 1.1 Introduction…………………………………..……..9 Overview of UK housing system……………….10 Chapter 2: 2.1 2.2 2.3 2.4 Literature Review……………………………..……13 Introduction………………………………..…...14 Bounded Rationality……………………………14 Behavioral Decision Making……………..……16 Macro factors…………………………………..18 2.4.1 2.4.2 2.4.3 2.4.4 2.4.5 2.5 Growth rate in GDP……….…………..….21 Inflation…………………….…………..…21 Interest rates……………………………...22 Growth in money supply……………….…22 Household spending………………………22 Micro factors……………………………..…....24 2.5.1 Renting Vs Buying ………..………27 2.6 Conclusions…………………………………….29 Chapter 3: 3.1 3.2 3.3 Research Methodology …….………………………...30 Questionnaire…………………………………...31 Management Service Questionnaire……………32 Purchasing Behavior questionnaire…………….33 Page 4 59 Limitations of Online survey…………………………59 Assumptions…………….Factors affecting investment decision in residential development 2007 3.7 4.4 4.4 Pilot survey………………………………………….9 4.5 4.8 4.1 4.41 Middle Income group……………………………….51 Regression Analysis…………………………………54 Assumptions…………………………………………55 Results of Regression analysis………………………57 Chapter 5: 5.3 Limitations……………………………………………….38 Results from Factor analysis………………………...36 Results of the survey…………………………….36 Income group classification………………………..……60 Page 5 .34 Chapter 4: 4.….1 5.2 4.35 Introduction…………………………………………..12 4..11 4..44 On-site and Offsite management……………………45 Likelihood of purchase with rise in Interest rates….42 Higher Income group……………………………….40 Low Income group………………………………….3 4..……………………….13 Findings and Discussion…………………………………..10 4...2 5.58 Limitations of Postal survey………………………….…38 Factor Analysis…………………………………….6 4. .62 Further Research……………………………….Factors affecting investment decision in residential development 2007 Chapter 6: 6...72 Appendix 2: Purchasing Behavior questionnaire……………77 Page 6 .…………………65 Appendix……………………………………………………71 Appendix 1: Management service questionnaire…………..1 Chapter 7: Chapter 8: Conclusion………………………………………………….………63 References………………………………. .....52 Figure 18: Rating given by respondents of different income profiles.....52 Figure 19: Likelihood of purchase in case of rise in Interest rates……53 Figure 20: Graphical Representation of the regression model………..40 Figure 6: Factor analysis for low income group……………………….45 Figure 11: Paired sample t test for factors for High income group……45 Figure 12: Location of management company………………………..48 Figure 14: Scores given for onsite and offsite management…………..44 Figure 10: Factor analysis for High income group……………………......56 Figure 21: Results of Regression analysis…………………………….20 Figure 3: Factors influencing purchase decision……………………….Factors affecting investment decision in residential development 2007 List of Tables and Figures Figure 1: Change in Real House prices in UK…………………………12 Figure 2: Macro factors………………………………………………..………43 Figure 9: Paired sample T test for factors for middle income group…...46 Figure 13: Breakdown of Factors for On-site management………...41 Figure 7: Paired sample t test for factors for low income group…….37 Figure 4: Income bracket of the respondents………………………….57 Page 7 ..38 Figure 5: Graphical Representation of the model……………………..49 Figure 15: Satisfaction levels for Onsite and Offsite management……49 Figure 16: Paired sample t test for Onsite and Offsite management…....50 Figure 17: Number of respondents and average score by respondents.42 Figure 8: Factor analysis for Middle income group………….. Factors affecting investment decision in residential development 2007 Chapter 1: Introduction “The key to growth is the introduction of higher dimensions of consciousness into our awareness” Lao Tzu Page 8 Factors affecting investment decision in residential development 2007 Introduction: The foundation of this Individual management project is based on my knowledge acquired through my group internship project at Southreef Properties Ltd. The objective of the group project was to understand respondent’s perception about the management service of current city centre developments and mixed tenure developments and its impact on the buying behaviour of people. While understanding the customer purchasing behaviour, I got encouraged to do in-depth research on the weight of various micro and macro factors influencing the customer’s decision to invest in a Residential Development. The study aims to look at various micro factors that affect the purchase decision. The researcher tries to analyse this by conducting factor analyses and paired sample t test on the compressed factors. Through this study we also aim to test the following hypotheses: H0.1: There is no difference between the satisfaction levels of onsite and offsite management and hence no effect on the purchase decision. H1.1: The satisfaction levels of onsite and offsite management differ significantly, hence have a significant effect on the purchase decision. H0.2: H1.2: Rise in interest rates does not affect different income groups differently. Rise in interest rates will affect different income groups differently. Page 9 Factors affecting investment decision in residential development 2007 1.1 Overview of UK housing market: Introduction: This section aims to provide an insight into UK housing market and makes the reader aware of the current scenario of the market. Real estate is the world’s biggest business, accounting for 15% of global gross domestic product (GDP) with assets of US$50 trillion compared with US$30 trillion in equities (Bloomberg, 2004). More than 50% of the world’s total assets are invested in direct real estate and securitized real estate investment vehicles such as real estate investment trusts (REITs) or real estate stocks (Brown and Matysiak, 2000). Real estate is an integral part of the economy and its returns are linked to the macro economy and business conditions (Liu and Mei, 1992). There are a large number of studies done to understand the risk-return performance and pricing of real estate in the macroeconomic context. However, there is little literature on understanding the factors affecting or drivers behind the real estate investment decision. Housing market is an important sector in the UK economy, with a large share of household wealth and debt held in and against nation’s home in form of investments and mortgages or loans respectively. In the last decade average overall house prices have increased by 180% and since 1996 national house prices have risen by 150% after accounting for general inflation (Paul Samter, 2007). Housing demand continues to grow faster than supply and with a strong economy prices look set to continue to increase. Cyclical Trends in Housing Market: UK has experienced four house price cycles since 1970. The first cycle was caused by the Barber boom in the early 1970’s. The second cycle, at the end of the 1970’s, was caused by general inflation which followed the 1979 oil shock. After this period till early 1990s the economy was dogged by high inflation, high unemployment and volatile growth. High inflation made housing an attractive investment but with house building being very Page 10 Factors affecting investment decision in residential development 2007 low resulted in house price inflation. The government responded to inflationary environment by rising interest rates and allowing sterling to appreciate against the US dollar which caused slump in house prices (See figure 1). The increase in the volume of credit, deregulation of the financial market and the growing economy contributed to the late 1980’s boom in house prices. In the late 1980s there was an inflationary boom in UK in which period house prices peak at over 30% and general inflation went over 10%. Financial deregulation made mortgage rates more dependent on interest rates and the reliance on variable rate mortgages made the housing market very sensitive to macroeconomic variable via fluctuations in debt and consumption. The volume and share of mortgage debt in GDP reached 53% in 1990 (Wilcox, 1999). But later continuous increase in housing and mortgage cost made housing less affordable again and caused the slump in early 1990’s. The policy action taken to reduce inflation led to a recession which intertwined with falling house prices and the result was that many people lost their homes or faced negative equity resulting in such circumstances that in some cases outstanding debt on the mortgage exceeded the resale value of their home (See figure 1). Late 1990’s witnessed the period of fourth cycle in house prices which was a result of growing economy, low unemployment and low mortgage rates. House prices increased by around 13% between 1990 and 1993 and then stabilised at the end of 1995. Figure 1: Change in Real house prices in UK over the period 1970-1998. Page 11 Lenders then started making use of new techniques such as accounting for individual borrower circumstances in affordability models in determining the amount to be lent to an individual. Fixed rate mortgages have become more popular and accounted for over 60% of loans extended in 2006 (Miles. mortgage market experienced a lot of changes and this resulted into a competitive lending environment. This transformation of mortgage market with development and increased sophistication of credit risk management tools helped lenders to identify. Remortgaging activity accounted for approximately 37% in 2006 in comparison to less than 20% ten years ago (David Miles.Factors affecting investment decision in residential development 2007 Source: Council of Mortgage lenders. 2004). Page 12 . position themselves and target the previously underserved parts of the market. Current Housing Market: Later in the early-mid 1990s. The cost of servicing debt has decreased dramatically since the early 1990s as interest rates have fallen and competitive pressures have squeezed lenders’ margins. Lenders are competing more strongly to attract existing mortgage holders and it has become much easier for customers to switch between lenders to get lower interest rates. 2004). Chapter 2: Literature Review “The difficulty of literature is not to write. not to affect your reader. but to affect him precisely as you wish” Louis Stevenson Why Serviced Apartments? Literature Review Bounded Rationality Behavioural Decision making Macro economic factors affecting the decision to invest Micro factors affecting the decision to invest Conclusions Page 13 .Factors affecting investment decision in residential development 2007 . but to write what you mean. The study first looks at understanding the concept of bounded rationality and behavioural decision making process.1 Introduction: The previous section dealt with the purpose of the study. This chapter attempts to have a closer look at the written literature.Factors affecting investment decision in residential development 2007 2. It also assumes that an investor has perfect information of his surroundings and he makes the decisions with the sole objective of profit maximisation. The proponents of the theory of rational investor assume that an individual makes decision on the basis of these principles. Ratcliffe(1972) understood that the essence of property is human behaviour and the premise that property discipline is an applied science was argued strongly by Grasskaamp (1991). Principles of maximisation.3). laying down testable hypothesis and overview of UK housing market. p. It assumes that not all information is freely available and there are time and cost constraints on the availability of the information. which affect the decision to invest in a residential property. This theory has been opposed by neoclassical economic theory which proposes that every investor or every person has limited access to the information and an individual is bounded by external constraints and one’s own behaviour. Bounded rationality is distinguished from rationality as “the perfect human rationality that is assumed in classical and neoclassical economic theory and the reality of human behaviour as it is observed in economic life” (Simon. 2.1992. Later it looks at various macro and micro factors that underpin the decision making process. self-interest and consistent choice commonly underpin this view of the rational economic factor.2 Bounded Rationality: Rationality is the core behavioural assumption in the orthodox neoclassical economics. It has been argued that bounded rationality perspective could be a useful supplement to the work that Page 14 . to acknowledge imperfect knowledge and satisficing behaviour (Susan Flint-Hartle. 1990ab. It can be seen that in real life individual investors have limited information and imperfect knowledge while making residential real estate decisions. p.Cognitive process simplification can be based on data. “A heuristic is a cognitive short-cut that allows for a reduction in the amount of information processed (Harding. The behavioural assumption of bounded rationality embodies rejection of perfect knowledge and optimisation on the part of economic actors.2000). 1999). In particular. Page 15 . which characterises the treatment of rationality in the neoclassical economics orthodoxy and instead involves an element of being limited or bounded (Bruin and Hartle. individuals lack the capacity to “take account of all the available information. Investors are mindful of past performance and they try to relate the current circumstances to past and then make their investment decision.1998. Heuristics in essence. 2003). 1999. The bounded rationality perspective shifts the emphasis from neoclassical “Homo economics” which demonstrates characteristics of optimisation and consistency based on perfect knowledge. 2003). 1999. The neoclassical condition of “perfect human rationality” locates constraints in external environment. is a cognitive data reduction process. compile exhaustive list of alternative courses of action. while Simon’s concept of bounded rationality views constraints arising from the cognitive limitations of individuals themselves (Brun and Dupuis. These reasons affect their investment decisions and that is why individuals are not always able to achieve optimality within the context of a dynamic and complex property investment market. p 350).Factors affecting investment decision in residential development 2007 considers the role of heuristics in affecting real estate decision making in the valuation profession (Diaz. p 350). as well as declarative and procedural knowledge” (Harding.69). Investors tend to invest in tried investment products and have preference for products with which they are comfortable. and ascertain the value and probability of each of possible outcomes” (Hindess. Factors affecting investment decision in residential development 2007 2. normative models that treat investor behaviour as highly structured and formalized. 1989. Much behavioral research that applies to property. These decisions are generally characterized as multi-level procedures.2000). Farragher and Kleinman. 1993). Hartigay and Yu. focuses on the way the individuals act as solitary actors or groups. Miles et al. Following section discusses that an investor decision making behaviour does not follow a set of rules but it is subject to decision environment and individual differences between decision takers. 1989 has proposed a ten-step model involving the generation of alternative ways to fulfill the initial strategy. Property decision making is a theory of analysis that attempts to provide a framework in which investors can make decisions to maximize their wealth. 1989) has been concerned primarily with the rules and techniques that people adopt with known normative models of the decision process (Phyrr. Phyrr.3 Behavioral Decision making: As mentioned above. The literature on investor decision making behaviour focuses on rational. The limited amount of investigation of property decision making (e.q Anderson and Settle. closing with management and disposal Page 16 . Hansz and Gray. three stages of detailed financial feasibility research. Barkham(1996) argues that the property sector is the most organizationally diverse in the UK economy. that the behaviour of an individual plays an important part in the decision making process. It is dominated by rationalist perspectives and focused on examination of sets of rules that people should follow.. Corporate decision making also involves heuristics and biases similar to those displayed by individuals because of behavioral momentum.1974). 1996. The behavioral decision theory has challenged rationalist approaches and looks more closely at the decision environment and individual differences between decision takers (Tversky and Kahneman. rather than studying that how decisions are actually made (Gallimore. fear of regret and an aversion to realizing sunk costs. 1996. Investors make investment decisions with an intention to hold the property for either long term or short term. According to study done by Judith Yates. These individual investors have been less responsive to profit maximizing criteria and have shown a long term commitment while institutional investors differed from them and were unwilling to invest in illiquid residential property and preferred profit maximization over long term investment. a significant proportion of individual investors have shown a long term commitment to investment in illiquid residential property yielding variable short-term but steady long-term returns. 1996 in Australia.1997). The factor that affects the property investment behavior is that not all investment is unintentional. cause investors to move away from normative models of investment behavior. They avoid booking a financial loss when the investment in showing loss but valuation at the year end make them involve in investment behavior as if they were investing for only one year (Thaler. 1996. Behavior decision making represents what actually happens when investors make decisions. strategic and tactical levels such as the definition of goals and objectives and a comprehensive search for alternative projects that meet the initial criteria. such as the heterogeneous pattern of market information. It has been shown that investors often fail to consider long-term investment prospects in term of short-term forecasts. Research has shown that the availability of information can affect the decision-making processes of investors.Factors affecting investment decision in residential development 2007 issues. The potential benefits from economies of scale and risk pooling were perceived to be insufficient to offset the effects of cumulative land taxes which reduced the returns on residential rental property and this influenced the large-scale investors to have a shortterm objective (Yates. Investment Page 17 . This is partly the result of taxation system that favored small scale investors over large-scale investors. This would imply that market imperfections. formulation of a fully-defined strategy and criteria for selection and assessment of property generated from environmental information sources. pp 47-48). 1994 found that investment most often occurs when the information is readily available to the investor about his preferred sector. Adair. The literature on decision making suggests certain key behaviors exhibited by investors at environmental. Forecasters exhibit wishful thinking when forecasting economic events as opposed by normative investment model (Olsen. permanent features of the tax system that might encourage home ownership as oppose to other forms of wealth accumulation. Factors that influence the demand for housing over longer horizons include growth in household disposable income.Factors affecting investment decision in residential development 2007 decision makers have been found to overreact to current information and display excessive optimism. On the basis of these factors different individuals make their investment decisions. Page 18 . They treat information received through personal contacts more important than general market information. These factors interact to reduce an investor’s adherence to a strictly normative investment model and suggest the importance of behavioral investment model. 2004). and the average level of interest rates. There are a lot of demand and supply factors that drive real housing prices. 2. Investors tend to relate past incidents or memories to present in forming their decisions. importance of decision environment and differences between individual behaviour in decision making process. Even economic forecasters exhibits overreaction in responding to recent information by making large forecast changes (Ehrbeck and Waldmann.1996). 1997). An individual perceive these factors differently and then form one’s decision to invest in a residential property. The following section discuses various macro factors that underpin these behavioural decision making process. The availability and cost of land.4 Macro economic factors: Introduction: The last section discussed about the bounded rationality framework. gradual shifts in demographics (such as the relative size of older and younger generations). the cost of construction and investments in the improvement of the quality of the existing housing stock are longer-term determinants of housing supply (Tsatsaronis and Zhu. which keeps servicing costs of mortgages within the household budget limits imposed by current income. These flexible mortgage contract terms are in turn driving the demand for residential housing. A declining interest rate environment. The feedback from property prices to credit growth is strong where there is greater prevalence of Page 19 . cost and flexibility of debt financing. 2004). stamp and registration duties and inheritance taxes and finally the uncertainty about future prospects that follows periods of heightened volatility. valuations that are based on historical levels of prices would tend to lag current market trends exerting a countercyclical influence on credit availability. Housing investment decisions depend critically on the availability. typically boosts the demand for residential real estate. Mortgage accounting practices can influence the creditor’s appetite for exposure to the market and in turn feedback from house prices influences the availability of finance. The spread of credit scoring methods and standardised mortgage contracts. Some of the benefits due to these reduced costs and the improved liquidity of mortgage assets have been passed on to households in the form of lower transaction fees and more flexible mortgage contract terms. The residential real estate market has benefited from the increased reliance on market-based channels of financing. has led to the growing securitization of mortgage assets. The level of ceilings on the loan-to-value (LTV) ratios and valuation methods of property determine the ability of banks to lend against the real estate collateral. coupled with a growing appetite for tradable instruments among portfolio institutional investor. Methods that base lending decisions on the current market values tend to increase the sensitivity of credit availability to market conditions and helps to create a positive momentum in market demand.Factors affecting investment decision in residential development 2007 Housing markets also depend on a number of factors that include the length of planning and construction phases and the inertia of existing land planning schemes. Other factors affecting the liquidity of housing markets are the transaction costs which include VAT. Credit institutions that used to hold a large volume of mortgages on their balance sheets now have the option to sell any unwanted exposure in the secondary market (Tsatsaronis and Zhu. Figure 2: Macro factors GDP growth rate Inflation Macro factors Interest rates Growth rate in Money supply Household spending Page 20 . The earlier part of the section discussed the effect of macro factors on the demand and supply in housing market. The following section describes the role and effects of macro factors on the investment behaviour and demand for residential property.Factors affecting investment decision in residential development 2007 variable rate mortgages and more market-based property valuation practices for loan accounting are used. Page 21 . Inflation is generally measured by changes in Consumer Price Index (CPI) which measures the retail prices of a fixed “market basket” of several thousand goods and services purchased by households (Liow.Factors affecting investment decision in residential development 2007 2. there is confidence within the economy and the individual investors and this stimulates the demand for the commercial and residential property. 2005). Firms seeking expansion would then require more commercial space and with the confidence in the economy individual investors might invest in residential property with a view to make profit in future. The reason for this is that capital gains under the low inflation may be lower than user costs of capital. During periods of high economic growth. Unexpected inflation rate is defined as difference between actual and the expected rate.4. A low level of inflation helps decrease speculation in housing markets and reduces house price volatility. 2005). Ferson and Harvey (1991) argue that unexpected inflation could be a source of economic risk and a risk premium would be added for such an investment which has exposure to unexpected inflation. Ibrahim and Huang.4. There are two kinds of inflation. On the contrary. expected and unexpected inflation rate. especially if low inflation is sustained by high interest rates. in periods of economic downturn investor’s confidence may be dampened resulting into less investment into residential property which in turn brings down the price of the property. Ibrahim and Huang.2 Inflation: Inflation rate plays a significant role in real estate investment decision. 2.1 Growth rate in GDP: GDP is a measure of all currently produced goods and services valued at market prices and is thus an aggregated value of all the industries in an economy (Liow. Higher interest rate will increase the debt service or mortgage cost and will affect the investment in the residential property while lower interest rate will reduce the cost and thus will drive the investments in residential property. Diana Kasparova and Michael White. Another effect of increase in house prices is that it raises the collateral available to certain households and reduces credit constraints placed upon them. prices and consumption are influenced by common factors and these factors can change income expectations which might drive an increase or decrease in both house prices and consumer spending simultaneously rather than one leading the other (Attansio. This discount rate is used for property investment appraisal decisions. Increases in money supply will give rise to greater inflation uncertainty and will have an adverse impact on real estate markets.4 Growth in Money Supply: Money supply is represented by M2 and is a broad measure of money in an economy. 2001). The excessive growth in money supply may lead to an inflationary environment and might affect the investments because of higher discount rates (Liow. 2. 2005).4. Most importantly. Hamilton and Leicester.4.3 Interest Rates: Interest rates have effects on both the future cash flow of firms and individuals and discount rates. Interest rates are considered in calculating the discount rate or cost of capital to appraise the investment decision.4. Ibrahim and Huang.5 Household spending: House prices influence household spending in various ways.Factors affecting investment decision in residential development 2007 2. 2. Discount rate is calculated by adding the risk free rate and the inflation rate. allowing them to buy more. Page 22 . An increase in house prices increases wealth and consumers spend more with increase in house prices. Blow. wealth accumulation through long-term capital gain/growth and attitude to risk. the size of the deposit. The results suggested that some lacked the specific knowledge about the impact of low inflation while some had the knowledge that low inflation erodes the potential for capital gain but this did not alter their belief that the decision to invest in a property was a sound one. there are various reasons motivating the property investment decision. 2003 in New Zeland. Intense competition among financial institution for share of residential mortgage market ensures ample availability of funds at competitive interest rates. 1992). the scope for real wealth gain does however increase. According to the concept “real wealth increase” highlighted in the study by Dupuis(1992) . A study was also done by Anne de Bruin and Susan Flint-Hartle. to understand the implications of low inflation on property investment decisions. With financial institutions increasingly willing to lend on smaller sized deposits.Hartle. to the extent that if all of the purchase price of a house can be borrowed and upon resale of that house all the relative increase goes to the owner” (Dupuis. “it is even possible to make real wealth gains from nothing but capacity to pay a mortgage. 2003 in New Zeland. The availability of cheap mortgages was proposed as another important factor which increases the chances of long term capital appreciation. People were rather more comfortable with the investment which leads to interpret this as satisficing behaviour. Economic reasons motivating the property investment decision which were highlighted in the study were return on investment. Hence.Factors affecting investment decision in residential development 2007 Previous studies: According to study done by Anne de Bruin and Susan Flint. particularly their lack of ability to embrace all available information. The study also focused on that how portfolio diversification and attitude to risk influences the decision to invest. The bounded rationality concept sees constraints arising from the cognitive limitations of individuals themselves. In this questions were asked by way of postal survey and interviews to assess the implications of low inflation on the decision to invest in a property. the smaller the outlay of the investor’s own equity in the property. A diversified portfolio to spread the risk is a Page 23 . Exemption of capital gains tax on housing is another motivating factor influencing property investment decisions. the greater is the wealth increase. optimisation is not the primary decision making criteria but there are other social and contextual factors in operation guiding the investment decision. Low risk and good investment returns were other reasons for investing in residential property. vegetation. difficult to measure and often deemed to be a complex bundle of attributes (Richard & Reed. some made losses in share market so they started to invest in property and some acted purely on advice of a financial planner. 1994). Zangerle (1927) and Henderson (1931) had done pioneering studies on real estate appraisal and had paid attention to the effects of environmental and building factors such as landscape views. There were various motives which guided the investment in property such as some perceived property to be a safe investment. The bounded rationality framework permits recognition of composite constraints as an integral part of the decision-making environment. The factors driving demand preferences for housing are constantly changing. 2007). Respondents were asked to rank their investment categories in order of importance to them. The study by Boris A. as an investment for the owner occupier (Hutchison. Finally. noise. The benefits of housing ownership can be said as twofold. Investment in property was highlighted as the most important investment by majority of respondents. the following section discuses about the effect of micro factors. the above section dealt with analysing the effect of macro factors. Other than providing shelter. albeit “boundedly rational”.5 Micro factors: The investment decision of an investor is affected by Macro and Micro factors. 2003 Page 24 . Yakov Odish and Larissa Fleishman. first to provide shelter for the entire household. second. 2. Portnov. housing also provides a long-term investment and security of tenure. air pollution and building patterns on property values.Factors affecting investment decision in residential development 2007 standard rule of investment. Therefore these investors may said to be rational. With the passage of time. proximity to city. schools and major roads gives rise to demand which in turn have a positive effect on property values. parking. 2003 has identified location as a composite effect of a set of locational attributes in property value formation and property investment behaviour. attractive views. renovations. commercial areas and other location specific amenities and disamenities. if the environmental conditions are not appealing. status and taxes influence the investment behaviour and property value formation. Tom Kauko. access to recreational facilities on the property values and the demand Page 25 .Factors affecting investment decision in residential development 2007 proposes that Environmental amenities in a residential neighbourhood (proximity to open areas. physical or visual ones and the positive locational externalities such as services. Location characteristics such as elevation of the building above the sea level. number of apartments per floor. the local homeowners see little value in investing in the maintenance of their properties. water parks. greenry. proximity to open areas. landscape views. assuming that such investment is unlikely to pay off in the future. these investments improve neighbourhood appearance and as a result the property prices increases. Locational externalities such as proximity to public transport. overall physical condition of the building and relative condition of the building relative to the adjacent properties. modifications. However. There are various factors affecting the property investment decisions. parks. gardening etc. greenbelts. Consequently the physical conditions of individual properties in the neighbourhood deteriorate leading to low housing prices. shops. Various studies in past have emphasized the importance of positive externalities of parks.in building additions. storage shed and private garden. • • Apartment characteristics such as balcony. Investors generally consider a large number of factors before forming their property investment decisions: • Building characteristics such as number of floors. He identifies that the negative locational externalities such as social. etc) encourage homeowners to invest more in the physical expansion and maintenance of their properties. Reed’s study highlighted the importance of Lifecycle factors such as the family formation. specifically in low-income neighbourhoods.. Kauko. For instance. and to a gradual drop in the socio-economic status of its residents. Recent studies confirm that specific local externalities. 2000. location and low traffic level as the components of environmental quality that influence the user’s satisfaction. Sungur and Cgdas (2003) list such elements as housing system.. quality of construction. The study also concluded that other than financial factors. There are various studies done to investigate the effects of housing rehabilitation programs on property values (Ding et al.Yizhak.2003).2003 gave the concept of capitalization theory. Lifestyle and Socio-economic factors play an important role and are some of the central drivers behind the decision of first time owner’s purchase. marriage or the size of existing house in the decision to buy a new house. The study done by Richard Reed and Mills. which suggests that an environmental improvement or a public good provided by local government leads to higher house prices in the vicinity. Simons et al. while beautiful scenery and the high socio-economic status of the neighbourhood may raise apartment price (Massey. such as proximity to industry and refineries affect property values negatively (Lentz and Wang. cleanliness. 1998) which indicate that residential investment in a new construction and rehabilitation has positive effect on property values.Factors affecting investment decision in residential development 2007 for the property. Public services and all the benefits provided helps in improving the image of the place and hence positive effect on value whereas the higher taxes imposed have a negative effect on value (Miller. 1998). Favourable environmental conditions are likely to lead to a lower turnover and to gradual Page 26 . Unfavourable environmental conditions in a neighbourhood may lead to a higher turnover of its housing stock. the proximity to arterial roads and other sources of noise and air pollution may lower the apartments’s price. 2007 came up with an interesting factor that influences the decision to buy a residential property. 1982). The neighbourhood environment both social and physical factors affects the demand for the apartment and its price.1985. unless the good causes significant negative externalities and becomes bad. greenry. landscape view. The actual level of such investment is reflected by both the price initially paid for the property. This modeling approach assumes that the monetary value of a dwelling unit or a residential property depends on the attributes a particular house or apartment may possess. The decision to purchase a house is no longer an automatic and progressive step in a household’s lifecycle – house purchasers are now faced with an increasingly complex “rent Vs buy” decision. 2002). 2003). 1999 and Rosiers. shaded patios and balconies etc (Etzion. Benefits of housing ownership can again be summarized as two fold. Portnov. 2. Investment in house can provide different returns in different regions while in case of renting a house. 1994.Factors affecting investment decision in residential development 2007 strengthening of the neighbourhood’s population (Boris A. Both buying and renting a house provides shelter. the Hedonic Price Modeling (HPM) is used to identify and measure the effect of environmental valuables and building characteristics on property values. Page 27 .Making the incorrect housing decision can have an adverse effect on the long-term wealth of the household and many first-time buyers are fully aware of the inflationary characteristics associated with the property (Hennessey. In most empirical studies. and investment in post-occupancy changes and modifications. Both renting and buying have their own pros and cons. first being to provide shelter for the entire household and second as an investment for the owner occupier (Hutchinson.5. The attributes are namely physical size the dwelling and environmental characteristics such as the number of rooms. 2001). the funds saved can be redirected to other investment vehicles. such as additional rooms. Reed. 2003). location etc (Becker and Lavee. 1994). age.1 Renting Vs Buying: Investment in housing is a considerable source of wealth for many individuals (Hilland & Detersen. Yakov Odish and Larissa Fleishman. 2001). The benefits associated with home ownership are: • • • • • Eventual debt-free ownership after all mortgages have been paid. Intangible sense of pride in home ownership (Heikkila. All these factors must be accounted for to estimate the demand for purchasing or renting. All these factors contribute to increased demand for rental housing. 1988. Investment in rental housing provides investment opportunities for investors (Hamnett & Randolph. 1994). All these factors partly contribute to rise in the rental market. The demand for rental housing also arose from difficulties and uncertainties of low and variable wages and from the inability of households to access owner occupation. Haurin and Gill. There are various factors and advantages associated with homeownership and renting which influence the purchasing or renting decision. Capital appreciation. The need for mobility has reduced the demand for home ownership and high interest rates have restrained access to home ownership (Doling. 2000).47). 2000).Factors affecting investment decision in residential development 2007 Interest in private rental market has been revived. Hedge against inflation with gradual but overall increase in overall value of the property (Waxman. 1987). A decrease in the level of support extended by government for social rented housing and limiting it to lower-income groups people and reduced demand for owner occupation has reinforced interest in private rental sector (Boelhower and van der Heijden. Increased emphasis on labour flexibility has affected the variability of incomes. 1988 p. this renewed interest can be seen from a number of perspectives. The changing economic and social climate contributes to demand for rental housing such as people unwilling to take on responsibilities for home ownership because of long term commitments or because of affordability problems and people wishing to leave existing households for better employment opportunities. Page 28 . Ability to alter residence in any manner at the discretion of home owner for home improvement. If one wants higher level of mobility and cannot pay huge monetary sum or wants to pay only minimum agreed amount per month. We understood that factors driving demand preferences for housing are constantly changing and are a complex bundle of attributes. Higher level of mobility.Factors affecting investment decision in residential development 2007 The benefits associated with renting are: • • • • • • Minimum capital outlay either weekly or monthly or in whatever agreed form. All the above mentioned factors need to be considered for depending on the need and desirability of the individual. building inspection fees associated with home ownership. The literature discussed about various macro and micro factors that underpin the behavioral decision making process and affect the decision to invest in a residential property. No possible negative equity with downturn in housing market. No Capital maintenance cost. Fixed rent for an agreed period which is not subject to fluctuations in interest rates. Conclusions of Literature Review: It can be inferred from this section that an individual makes decisions which are bounded by limited access to the information and behavioral differences. Page 29 . then one would prefer renting a property. loan application and processing fees. building characteristics and social and physical environment were also discussed. then one would prefer purchasing the property. No Entry/ Exit fees such as stamp duty. The importance of locational characteristics. If one needs the sense of pride of home ownership or capital appreciation. solicitor’s fees. do not ask a question and you’re a fool for the rest of your life” Chinese Proverb Methodology Qualitative Research Quantitative Research “Management service questionnaire” Factor Analyses Paired sample t test “Purchasing Behavior questionnaire” Linear Regression Page 30 .Factors affecting investment decision in residential development 2007 Chapter 3: Research Methodology “Ask a question and you’re a fool for three minutes. We also looked at the impact of management service on the buying behaviour of people. demographers. this question was asked after question 7 “Please rate the probability of you purchasing a city centre apartment as your next move” which set the tone for question 8.Factors affecting investment decision in residential development 2007 3. 2001). Question8 was asked to determine the weight of various micro Page 31 . Research Methodology: The research in this project is based on Qualitative and Quantitative research. The first question was “What are the important matters when considering your next move or purchase” (Question 8 of Management Service questionnaire and question 5 of purchasing behaviour questionnaire). some questions were specifically designed focusing on the individual project. The group did postal survey for the management service questionnaire and online survey for the mixed tenure developments questionnaire.1 Questionnaire: Survey research has become a staple for policy analysts over past several decades and has always served as a critical data source in the study of issues of interest to sociologists. While designing questionnaires. Two questionnaires were prepared for the group research. One questionnaire focusing on the management service (Appendix1) and the other focusing on the mixed tenure developments (Appendix2). few questions were specifically included in the questionnaires to identify the factors affecting the investment decision in a residential property 3. These questions were then included in the questionnaires for group project. and political scientists (Jagannathan. The group prepared two questionnaires to understand the customer perception about the management service of current developments and mixed tenure developments. Qualitative research is done by administering two questionnaires and Quantitative research is done by conducting factor analyses and Paired Sample t test on the extracted factors. Page 32 . A covering letter was posted along with survey questionnaire requesting the respondents to submit the questionnaire no later than 12 noon on Friday.2 Management service Questionnaire: A postal survey of residents who live in apartments within the NG1 postcode was conducted (Appendix 1). The researcher combined the data from both the questionnaires for question on factors affecting the purchase decision.5% to 6. Both these questions were then analysed to research the effect of rise in interest rates have on the customer’s decision of different income profiles in purchasing a residential apartment. 31 August 2007. To encourage the respondents to submit the questionnaire on time Southreef Properties announced a draw in which respondents will have the opportunity to win £250.Factors affecting investment decision in residential development 2007 and macro factors influencing customer’s decision to purchase a residential apartment. Question 3 & 4 of “Management service questionnaire” (Appendix1) were asked to determine the importance of On-site management in a development and its influence on the purchaser’s decision to invest in a residential property.25% from the current rate” (Question 18 of Management Service questionnaire) was asked to determine the effect of rise in interest rates on respondents decision to purchase a residential apartment (Appendix1). 3. Data was collected for the factors affecting the purchase of a property from both the questionnaires Question 8 of Management service questionnaire (Appendix 1) and Question 5 of Purchasing Behaviour questionnaire (Appendix 2). Yet another question was asked to determine annual household income of the respondents (Question 19 of Management service questionnaire and Question 12 of purchasing behaviour questionnaire). Another question “Please rate the probability of you purchasing a city centre apartment as your next move if interest rates move up by 0. It was mentioned that the draw will take place on 10th of September. Questionnaires were sent to about 800 city centre residents by the way of post with an enclosed pre-paid envelope addressed to the University. 3. this question was not included.Factors affecting investment decision in residential development 2007 We got 58 responses for this questionnaire a response rate of 8. Here in this questionnaire.5% from the current rates” because this would have effect on the focus of the questionnaire. These are the people who might be considering purchasing or renting another apartment so it was essential to know their view on the management service and what are the factors that influence their decision in purchasing an apartment in any development. The questionnaire was sent to about approximately 600 staff members from different departments of University of Nottingham. We got in total 66 responses to this questionnaire.These people are of same profile and have similar characteristics to the target market of Southreef Properties Ltd. This could be a good sample as these people have similar profile and characteristics of the target market. Page 33 . So to not to affect the quality of the questionnaire. we could not include the question that “Please rate the probability of you buying or renting an apartment if the interest rates increase by 0. Question 5 of this questionnaire focused on identifying the factors affecting the decision to invest in a residential property (Appendix 2). a response rate of 11%. Online survey was conducted by posting the questionnaire on the web server and an email was sent out to all the professors and faculties of University of Nottingham requesting them to fill it.3 Purchasing Behaviour questionnaire: An online survey was done to understand how mixed tenure residential developments are perceived and what influences customers decision to purchase or rent. Online survey was conducted to understand the effects of affordable housing on the development. Targeting city centre residents was essential to understand as these are the people who are currently staying in apartments in the city centre developments . Online survey was also done by sending the questionnaires to the MBA cohort as these could be people who might be living in an apartment and would consider in future to buy or rent an apartment in a mixed use or mixed tenure development.5%. Page 34 . my supervisor.4 Pilot Survey: A pilot survey of the ‘Management service questionnaire’ was conducted within the MBA cohort at The University of Nottingham. . Emphasis was given on the feedback given by the MBA cohort coming from varied experience and backgrounds. for his comments on the questionnaire.Factors affecting investment decision in residential development 2007 3. The questionnaire was also shown to Bob Berry. The pilot survey was done by e-mailing the questionnaire to the MBA cohort and asking for their comments on the interpretation of the questions. The purpose of the survey was to identify any difficulties in understanding the questions posed in the questionnaire. His comments on the questionnaire were very helpful in designing the questions for my individual project. The ‘Management service questionnaire’ was amended quiet a number of times which improved the quality of the questionnaire. Factors affecting investment decision in residential development 2007 Chapter 4: Findings and Discussion “The person who sends out positive thoughts activates the world around him positively and draws back to himself positive results” Norman Vincent Peale Page 35 . Factors affecting investment decision in residential development 2007 4. The researcher has conducted regression analysis to find the effect of rise in interest rates on the purchase decision and also conducted T test the importance of Onsite management. The researcher used factor analysis to compress the factors affecting the purchase decision and has related it to different income group respondents. Findings and Discussion: 4.38). Size of Living Accommodation (4. About 129 respondents rated these factors on a scale of 1 to 5. (See figure 3). Here the maximum score and minimum score for any factor is 5 and 1 respectively. On-site management was rated with the score of 3.95 implying that it was an important factor but only after the primary factors such as location and value for money. The findings suggest that Location (4.22). Scores were given to each factor from 5 to 1 depending on the importance of the factor to the customer in making their purchase decision. Page 36 . followed by value for money (4. Then these total scores were divided by the number of respondents to report average scores for each factor.13) and Number of bedrooms (4. Access to car parking (4. It also focused on identifying the rise of interest rates on the purchase decision. 4.2 Results of the survey: Question 8 of Management Service questionnaire and question 5 of Purchasing behaviour questionnaire was asked to determine that what are the significant factors influencing the purchasing or renting decision of customers in general. So it can be inferred that On-site management is important but only after basic criteria of the location and size of the dwelling are fulfilled.04) were other important influencing factors.1 Introduction: The questionnaire aimed to investigate the factors affecting the purchase or investment decision in a Residential Development.60) was cited as the most influential factor. 5 1 0. Findings suggest that majority of respondents (35%) were from higher income group. re pu Ac ta ce tio ss n to pu bl ic Cl Lo os ca e t io to n re cr ea Nu tio m n be ro fb Si ed ze of O liv nin si g te m an Se ag ns e e of co m Va lu O e nfo si r te se cu Ac rit ce y ss to ca r Criterion Page 37 . Figure 3: Factors influencing purchase decision Important factors influencing purchase decission 5 4.04 3. (See figure 4).60 4.22 3.95 3.Factors affecting investment decision in residential development 2007 Access to public transport (3.13 Average score out of 5 4 3.5 2 1. Developers should consider all these factors into account to improve the perception and services offered in their development to distuinguish themselves from other developments.32 3.64 4.53 3.30 3.64) were other important factors.53) and On-site security (3.38 4.5 4.5 0 De ve lo pe rs Question 19 of Management Service questionnaire and question 13 of Purchasing behaviour questionnaire was asked to determine the annual household income of the respondents to relate that what factors affect the people of different income groups.5 3 2.29 4. 2006).34% 34.0 00 -19 . 48% 17.24% 10.000 and over within higher income group (Source: Annual Survey of Hours and Earnings.0 00 + 4.000-£40.62% 10.4 Factor analysis: Once we collected responses from Question 8 (Factors) &19 (Household Income) of Management service questionnaire (Appendix 1) and Question 5 (Factors) & 12 (Household Income) of Purchasing Behaviour questionnaire (Appendix 2). So we could classify low income group in £0-£20. What is the income bracket of repondent 10.000 and £40.34% 60.3 Income group classification: The researcher looked at the Annual Survey of Hours and Earnings to determine the average UK salary and for the purpose of classifying respondents in different income groups.999 40.0 00 -49 .0 00 -59 . 97% 8.0 00 -39 .999 50. According to ASHE 2006 survey results. We used factor analysis to compress the data and entangle the complex linear relationships Page 38 .999 30. 4. middle income group within £20.Factors affecting investment decision in residential development 2007 Figure 4: Income bracket of the respondents.000 20.999 18.7% in April 2006 to reach 447 pounds.0 00 -29 . the median weekly pay for full time employees in UK grew by 3.000. £40. as a lot of information is highly co related which gives rise to the problems of multicolinearity in Data. Factor analysis technique eradicates this problem and transforms data without loosing relevant information. This approach would facilitate prospective developers to better understand the relationships between set of variables and develop applicable strategies to fulfill the needs of the purchasers.000) High income group (£40. The researcher understands that different income group people have different needs therefore the study uses factor analysis for three income groups: • • • Low income group (£0 .e. Structure in data: Factor analysis is used to uncover the basic structure in data analysis. • Hypothesis testing: Factor analysis helps test hypothesis as it classifies clusters of data under one factor it becomes easier for the researcher to identify factors that are more important than others.000) Middle income group (£20. systematic attempt to chart major empirical concepts. Besides this factor analysis is also used for mapping i.Factors affecting investment decision in residential development 2007 between the data.variance and Correlation. The researcher used factor analysis to help the developer target and position the project rightly. This would help developers to identify the target Page 39 .£20. • Data Transformation: Factor analysis is used to transform data especially in case of financial research.000 .000 and above) The researcher used factor analysis because of following: • • Parsimony or Data Reduction: Factor analysis is used to reduce mass data into condensed and more comprehendible formant. the study uses factor analysis to classify data based on Co. sources of variation. as mentioned that earlier different income groups have different needs. It condenses complex data into more comprehensible factors on the basis on underlying structure of data. since the questionnaire had 11 criterions that could affect the purchase decision of respondents therefore in order to facilitate the analysis of data. we would first look at the results of low-income group that consists of respondents in the income bracket of £020. and any value between 0.3-0. Conduct factor analysis based on the responses given by each income group Conduct paired sample t test to ensure that the important factors are statistically different from others 4. in our case the Chi-square statistics is 84.Factors affecting investment decision in residential development 2007 segment and for the success of such project the developer would need to concentrate on the factors that have a highest score when compared to other factors.23. Middle income and high income group. The Bartlett’s test of Sphericity is measured in terms of Chi-square. Figure 5: Graphical Representation of the model Graphical representation of the model Conduct individual t tests to evaluate the importance of the factors indivisually Divide the respondents based on 3 income groups: Low income. The Bartlett’s test of Sphericity.000.5 Results from factor analysis: The study conducts factor analysis based on income groups. The Kaiser-Meyer-Olkin (KMO) measure of sample adequacy is 0. that measures for the adequacy of sample and looks at the correlation among the components to analyze if the data set needs factor analysis.7 says that the sample is adequate to run a factor analysis.178 at 55 degrees of freedom this says that there was significant co relation Page 40 . 63 is the most important factor for this income group. Number of bedrooms.0001. In order to find the importance of the factor in relation with the other factors the researcher also conducted a paired sample t test for factor 1 and Page 41 . The determinant for the co variance matrix is . Location and Value for Money cluster are the important factors. For lower income group Access to public transport. The researcher reckons that factor 1 that has a t score of 30. In case of lower income groups factor analysis compressed the components into 3 factors: Figure 6: Factor analysis for low income group 4.6 Low Income group: Once factor analysis compressed the data into 3 factors we ran t tests (the scores of which are reported in the diagram above) to determine which of these factor proves to be the most significant factor (See Figure 6).Factors affecting investment decision in residential development 2007 in the data and the data warrants factor analysis.0065 that is higher than the significant value of 0. 7 Middle-income group: The middle-income group in our sample consists of respondents that have income between £20.63 Factor 3 3. The compressed factors and its components are presented below: Page 42 .12 2. 4.575 that is much higher than what the study has in lower income group but still above the level of 0.08 We observe here that the paired sample t score when comparing factor 1 and factor 3 is 2.0001 cut off level.96 this means that factor 1 is statistically more significant than factor 3 and can act as a Unique selling proposition if a developer wants to target low income groups.08 at 55 degrees of freedom.000-40.Factors affecting investment decision in residential development 2007 factor 3 in this case.97 2.080 that is higher than the .000.15 0. The results of the paired sample t tests are listed below: Figure 7: Paired sample t test for factors for low income group Name Mean Standard deviation Paired sample score T score Factor 1 4. as both these factors are relatively important factors. the determinants for Co-variance is 0.56 30. The Bartlett’s test of Sphericity that measures for the adequacy of sample and looks at the correlation among the components to see the need for factor analysis.38 1. The Kaiser-Meyer-Olkin (KMO) measure of sample adequacy is . This says that our test is significant at .56 21.56 which is higher than the cut off level of +/-1.05 level of significance.50 and says that the sample is adequate to conduct a factor analysis. As said earlier this test is measured in terms of Chi-square in this case Chi-square is 72. Size of living and Value for money are the factors that are most important to middle income group people (See figure 8). In order to make sure that factor 1 can act as a differentiating factor if one wants to target the middle income group the study conducts paired sample t test (between factor 1 and factor 2 the next strongest factor in terms of t scores). Location. Number of beds. 2007 The test compressed the data into 4 factors (which are listed above with their respective t scores) it is evident from above chart that factor 1 i.Factors affecting investment decision in residential development Figure 8: Factor analysis for Middle income group. The statistics for the paired sample t test are reported below: Figure 9: Paired sample T test for factors for middle income group. Page 43 .e. 8 Higher income group: The higher income group in our sample consists of respondents that have income of £40.39 .05 level of significance. as a unique selling proposition if one wants to target the middle income group. laying emphasis on the services that fall under factor 1 can help a developer better position their houses/apartments in the market.36 57. that is above the critical t level of +/-1.36 32. The researcher feels that factor 1 can act. The compressed factors and its components are represented below in figure 10.96. The covariance matrix determinant is .060. Figure 10: Factor analysis for Higher income group Page 44 . The Bartlett’s test of Sphericity is 150.71 Factor 2 3.0001.Factors affecting investment decision in residential development Name Mean Standard deviation Paired sample score T score Factor 1 4.36. which is higher than the critical level of .26 6.569 that says that the sample size is adequate to conduct a factor analysis.000 and over.58 1. The Kaiser-Meyer-Olkin (KMO) measure of sample adequacy is . 4.88 6.96 at 55 degrees of freedom that says that the test is statistically significant at 0. This means that the sample size is adequate and the sample warrants a factor analysis.92 2007 The results of the paired sample t tests suggest that factor 1 is statistically more significant than factor 2 as the t score is 6. 39 47. The results of the paired sample t test are given in figure 11 below: Figure 11: Paired sample t test for factors for High income group.13 5.70 Factor 3 3. We find that factor 1 that comprises of Sense of community.54 1. location.99 5. Name Mean Standard deviation Paired sample score T score Factor 1 4.10 .39 63.86 Page 45 .Factors affecting investment decision in residential development 2007 The test compressed the components into 4 factors that are listed above with their respective t scores. In order to see that factor 1 can act as a differentiating factor the researcher also looks at paired sample t test for factor 1 and factor 3 to ensure that factor 1 is statistically more significant than factor 3. Number of bedrooms and value for money is relatively more important than the other 3 factors. Where is your Management Company located 5% 34% 19% On-site Nottingham Outskirts East Midlands IN UK 7% 14% Don’t know 21% Page 46 . The researcher feels that factor 1 can act. The respondents were also asked to state whether their apartment management was onsite or offsite (Question 2 of Questionnaire 1).The figure 12 below shows the responses as rated by the respondents.39 that is higher than +/-1. The questionnaires asked the respondents to rate their apartment management based on 4 criterions depending on how satisfied or dissatisfied they were with those aspects of their management.96. Figure 12: Location of management company.9 Onsite and off site management as an influencing factor in purchase decision: The study also looks at the comparison between onsite and offsite management as an influencing factor in purchase decision (Question 3&4 of Management service questionnaire). 4.Factors affecting investment decision in residential development 2007 We can see that factor 1 is statistically more significant than factor 3 with a t score of 5. as a unique selling proportion in terms of satisfaction level if one wants to target the higher income group. Figure 13: Breakdown of Factors for On-site management. The study aims to test the following hypothesis about onsite and off site management: H0 : There is no difference between the satisfaction levels of onsite and offsite management and hence no effect on the purchase decision. the rest of the respondents had offsite management of which 14% reported that their management company was located in UK. H1 : The satisfaction levels of onsite and offsite management differ significantly. The respondents were asked to rate their satisfaction level on the following criterion: Page 47 .Factors affecting investment decision in residential development 2007 As one can see from the above graph that 19% of the respondents reported that they have on site management in their apartments. The researcher feels that the respondents would rate on site management higher than off site management on all the 4 criterions. hence have a significant effect on the purchase decision. 5% reported that they had no information on where there management company was located while 21% said that their management company was located in east-midlands. 7% said that their management company was located in the outskirts of the city. Factors affecting investment decision in residential development 2007 General maintenance Cleanliness Management company Satisfaction Handling of request and complains Value for money The respondents were asked to rate their satisfaction on the following scale: • • • Satisfied Neither satisfied nor dissatisfied Dissatisfied In order to quantify these responses we use the following scale: Satisfied 10 Neither satisfied nor Dissatisfied 5 Dissatisfied 2 Page 48 . Figure 15: Satisfaction levels for Onsite and Offsite management.00 7.29 Onsite management Offsite management Criterions Page 49 .00 5.00 1.00 0.21 6.02 6.55 3.00 2.30 3.00 6.86 6.55 3. the respondents rated On-site management higher on almost all the 4 criterions especially on Handling of request and complaints and Value for money (See figure 14 and 15).86 6.Factors affecting investment decision in residential development Figure 14: Scores given for onsite and offsite management.93 5. Satisfaction levels in case of Onsite and off site management Average satifaction score out of 10 8.77 4.00 3.29 4.93 5. The study now aims to explore that are these differences statistically different the researcher therefore conducts paired sample t tests between all the 4 criterions of onsite and off site management.00 Cleanliness Genral maintenance Handling of request and compains Value for money 4. The graph below depicts the satisfaction levels of onsite and offsite management. 2007 The matrix below shows the average scores given by onsite and off site management: C leanliness O nsite m anagem ent O ffsite m anagem ent G enral m aintenance H andlingof request andcom m Value for oney pains 6.21 6.30 3.02 According to our sample study.77 4.00 4. the results of which are also attached in the above table (See figure16).44 The t values for all the criterions in case of onsite management are higher than those of off site management.90 1. In order to see that the satisfaction level in case of onsite management is higher than off site management the researcher conducts paired sample t tests.96 cut off level. Cleanliness General Maintenance Handling of requests and complains Value for Money Onsite Management Off site Management Paired (onsite and offsite Management) 9. 4. Handling of requests and complains and value for money are higher than those of offsite management and the difference is statistically significant with t statistics of 2. Figure 16: Paired sample t test for Onsite and Offsite management. Page 50 .64 4.5 level of significance (See figure 16).41 6. Therefore we reject the null hypothesis at 0.04 6. The results of the paired sample t tests are presented in the table below: (See figure16).48 8. The satisfaction levels in case of General maintenance.Factors affecting investment decision in residential development 2007 The study now aims to explore that are these differences statistically different. We can observe although the satisfaction levels in cleanliness for onsite management are higher than those for off site management.06 3.11 4. the difference however is not statistically significant as the t values are lower than the 1.96.06 and 3.69 2. The researcher therefore conducts paired sample t tests between all the 4 criterions of onsite and off site management.44 respectively and all of these are higher than the critical t value of 1.82 8.11.02 5.99 10. 000-£40. The response to this question was consistent with the hypothesis laid above. 4. Looking at the current scenario and the effortless increase in the real estate market the high-income group respondents would still be willing to purchase properties.000) High income group (£40.10 Likelihood of purchase in case of rise in interest rates: One of the questionnaires aimed to gather opinion of people about the affect of purchase decision if there were a rise in interest rates (Question 18 & 19 of Management service questionnaire. The respondents were asked to rate their willingness to purchase on a scale of 1-5 where: • • • • • 1= Highly Unlikely 2= Unlikely 3= Neither likely not unlikely 4= Likely 5= Highly likely The average ratings of the respondents are presented in the figure 17 below: Page 51 .000 and above) The researcher feels that respondents in the high-income group would be willing to purchase a property despite rise in interest rates. This was to know that to what effect the rise of interest rates have on their purchase decision.Factors affecting investment decision in residential development 2007 The researcher feels that On-site management can act as a significant differentiating factor and given enough awareness can also affect the purchase decision of people looking for apartments. The researcher has divided the respondents into 3 categories based on annual income: • • • Low income group (£0-20. Appendix1).000) Middle income group (£20. However as predicted the higher income groups willingness to purchase seems to be unaffected by rising interest rates and the score of 2. if we exclude these 3 cases the average score of low-income group as rated by respondents would fall to 1.33 that says that they would be unlikely to purchase Page 52 .17 which is skewed towards unlikely.17 by Respondents of 6 Middle Income 21 High Income 30 2.Factors affecting investment decision in residential development Figure 17: Number of respondents and average score given by respondents. The matrix below shows the responses given by each of the group: Figure 18: Rating given by respondents of different income profiles.97 is skewed towards 3 which. Highly likelyLikely Neither likely nor unlikelyHighly unlikely Unlikely 0 0 3 1 2 Low income 0 2 8 5 6 Middle income 7 6 2 9 6 High income There were 7 respondents in case of high-income group who expressed their willingness to purchase as highly likely despite of rising interest rates and 6 of the respondents said that they would be likely to purchase despite the rising interest rates.29 2.97 The average scores given by respondents in the Low-income group is 2. even the middle income groups decision seems to be affected by the rising interest rates. this says that their decision will be unaffected by the rising interest rates. 2007 Low Income Number respondents Average score given 2. Due to these 3 respondents the average score of low-income group rose significantly. In case of lower income group 3 of the 6 respondents were undecided on their purchase decision if the interest rates rose. However the study infers from the graphs and analysis above that purchase decisions of high-income group are less likely to be affected by rising Page 53 . Income wise likelihood of purchase 60 50 Percentage of respondents 50 40 30 23 20 20 10 0 0 0 17 38 33 Low income 30 24 29 Middle income 20 High income 10 7 0 Highly likely Likely Neither Unlikely likely nor Highly unlikely Likelihood of purchase One can observe that high-income group respondents have expressed their willingness to purchase despite the rising interest rates.96. The figure 19 below shows a graphical representation of the number of respondents and their willingness: Figure 19: Likelihood of purchase in case of rise in Interest rates.84 in case of high income group intensity of the affect on score is less and the score would be reduced marginally to 2. The researcher also wanted to conduct a t test to find the significance of responses but due to the inadequacy in sample size such a test could not be conducted. Similarly in case of middle income group 8 respondents are undecided about their purchase decision if we remove these respondents the average score of middle income group respondents would fall to as low as 1.Factors affecting investment decision in residential development 2007 in case of rising interest rates. The idea here is that if rise in interest rates have a differential impact on different income groups the intercept (alpha) of the regression will be higher for high income group than middle income group. 4. In order to identify the effect of interest rates the researcher conducted regression analysis. • The study uses the following regression equation to predict the dependent variable: Yi = α+ β (D) +℮i Where: Yi= Dependent variable α = Intercept β= Beta D= Dummy variable ℮i= Error term. Page 54 . The study uses linear regression for the following reasons: • • To establish a relationship between dependent variable (likelihood of purchase) and independent variable (dummy variable).11 Regression analysis In order to test the hypothesis of impact of rise in interest rates on different income groups we conduct a linear regression analysis. • • The dummy variable is set to 0 if the income group in question is a low income group and it is set to 1 if the income group is middle or high income group. The dependent variable is random in nature hence the regression would aim to establish a relation between income group and the likelihood (willingness to purchase and income groups).Factors affecting investment decision in residential development 2007 interest rates. Dummy variables are useful as they enable us to use a single regression equation for multiple groups. 4.12 Assumptions: The study makes following assumptions about the data in order to conduct linear regression: • • • • • The study assumes a linear relation between the dependent and the independent variables. There is no perfect co linearity between predictor variables. The residual terms are uncorrelated that is they are independent terms and has no auto correlation. The residuals in the model are random and normally distributed with a mean of zero (that is they are random). The independent variable is categorical or quantifiable in nature. The study then compares the intercepts of both the regressions.Factors affecting investment decision in residential development • 2007 In order to make the result of regression comparable the researcher conducts two such regressions based on middle income and high income group. The figure 20 below shows graphical representation of the model: Page 55 . 000-£40. Is true Conduct regression 1 for middle and low income group and set the dummy 1 for middle income Compare the intercepts of both regressions Figure 20: Graphical Representation of the model Income group classification: Based on the questionnaires the researcher has classified the income groups into 3 categories: 1.000 Page 56 . middle income and low income Conduct regression 2 for low income and high income group set dummy 1 for high income If intercept of high income group is higher than middle income group then alter.000. Middle income group 3. High income group The Low income group comprises of respondents in income group of 0-£20. Low income group 2. The middle income group comprises of respondents in the income group of £20.Factors affecting investment decision in residential development 2007 Graphical representation of model Distribute income groups as high income. 44 3.088 Type Middle income group High income group Alpha (α) 2.026 .167 and in case of middle income group is 2. 4.00 the t value for intercept of middle income group is higher that the t vale for high income group however both the values are statistically significant and above the cut off level of 1. The high income group consists of respondents in the income bracket of £40. but this doesn’t affect the result of the studies as the method deployed in this case is more concerned with looking at the values of α more than any thing else.0 2. The results of regression show that there is a deferential impact of interest rates on different income groups. It is evident from the table that high income group respondents are less likely to change their purchase decision in case of rising interest rates.Factors affecting investment decision in residential development 2007 this group inculcated the average UK salary that is £ 25.90 The table(See figure 21) above summarises the statistics of regressions carried out in order to test the hypothesis. Page 57 .000. The following table depicts the results of regression analysis: Figure 21: Results of Linear Regression: R2 .000 and above.96.167 T values 4. The intercept in case of high income group is 2.13 Results of Regression analyses: The study looks at testing the following hypothesis: H0 = Rise in interest rates do not affect different income groups differently H1 = Rise in interest rates will affect different income groups differently. The table also shows that R2 in both the cases is low. Factors affecting investment decision in residential development 2007 Chapter 5: Limitations Page 58 . The group received 66 responses for this questionnaire. when most of the people were on vacations which could have affected the response rate. who might also be considering purchasing an apartment in future. The group did postal survey of city centre apartment residents living in Nottingham. So the data and responses from this questionnaire could not be used to analyze the effect of rise in interest rates on purchase decision of people of different income profiles. Another limitation was that we had a moderate response rate and subsequently a small data set for our analysis due to the fact that mixed income Page 59 . 5. The survey didn’t include people living elsewhere in Nottingham and people living in houses. a response rate of 11% for about 600 respondents. The postal survey was conducted during summers. when most of the people are on vacations and this might have affected the response rate.Factors affecting investment decision in residential development 2007 5. To not to affect the focus of the questionnaire the question on interest rate wasn’t included in this questionnaire. The research aimed at identifying the factors affecting the purchase decisions and the effect of rise in interest rates on such decisions. Limitations: The research in this project specifically aimed at the city centre residents of Nottingham for Management Service questionnaire and staff of University of Nottingham for the Purchasing Behavior questionnaire.1 Limitations of the Postal survey: In this research there were certain limitations which could have affected the outcome of certain results. The online survey was conducted during summers. The questionnaire was complex and lengthy which may have altered the customers’ responses by finding them difficult if not impossible to understand.2 Limitations of Online Survey: The limitation of this questionnaire was that it focused more on the effects of affordable housing on the development. 5. Data was collected for the factors affecting the purchase of a property from both the questionnaires Question 8&19 of Management service questionnaire (Appendix 1) and Question 5&12 of Purchasing Behaviour questionnaire (Appendix 2). 5. Factors affecting the decision to invest for people in Nottingham are assumed to be similar to factors affecting the decision of people all over UK.3 Assumptions: The researcher has combined responses of both the questionnaires for the study to have a large data set in order to produce better results. Middle and Higher Income group.Factors affecting investment decision in residential development 2007 housing is a sensitive matter and not many people would like to express their comments on such a sensitive issue. Page 60 . Another assumption is that purchasing behaviour of people in Nottingham is akin to the purchasing behaviour of people all over UK. This was done to understand the factors that are more important to people of Low. Factors affecting investment decision in residential development 2007 Chapter 6: Conclusions Page 61 . Location.variance and Correlation and compressed the number of factors into clusters. location and value for money as the most important factors. To facilitate the analysis of data. Number of bedrooms. Sense of community and Value for money and try to cater these services better in order to target and position its development successfully. complaints and value for money.e. Location and Value for Money were highly rated by lower income group people. The research also focused on to determine the satisfaction levels of On-site and Off-site management with respect to services such as General maintenance. So for a developer like Southreef properties. Size of living accommodation and Value for money were the factors that were highly valued by middle income group people. After conducting quantitative analyses this study accepts the alternative hypotheses and concludes that satisfaction level in case of On-site management are statistically higher than those of Offsite management. Handling of requests. The researcher feels that including On-site management with high levels of service commitments would act as a differentiating factor and contribute to the future valued of the development. value for money. sense of community. which is targeting at the higher end of the market should consider all the factors which were rated highly by middle income and higher income group people. It can be inferred from the study that factors such as Access to public transport. So a developer. Page 62 . Size of living accommodation. Conclusion: This research identified. Higher income group people rated number of bedrooms. as different income group people have different needs. large number of bedrooms. These clusters of factors were then related to various income groups. like Southreef Properties should include On-site management in their development.Factors affecting investment decision in residential development 2007 6. A developer should keep in mind all these factors i. Number of bedrooms. location. the study uses factor analysis to classify data based on Co. prioritized and categorized factors affecting the decision to invest in a residential property of different income groups. 1 Further Research: The researcher has implemented basic statistical tools and questionnaires to analyze the important factors affecting the purchase decision.Factors affecting investment decision in residential development 2007 The researcher also conducted a study to determine the extent of effect of 0. But there are avenues open for further research in terms of using focused questionnaires for the primary research on investigating the micro factors affecting the investment decision of the respondents.5% rise in interest rates in their purchase decision. that high income group people are less likely to be affected by 0. There is scope for a focused study with a larger sample and more advanced techniques could be used to produce better results. The research confirmed with the help of regression analyses that respondents in the high-income group would be generally be willing to purchase a property despite a rise in interest rates. So the study accepts the alternative hypotheses. 6. Page 63 .5% rise in interest rates on the purchase decision of various income groups. According to the research. Low-income group and middle income group people seem to be affected by the rise in interest rates. The conclusions drawn from the study should be helpful to Southreef Properties Ltd or for any other development. These factors should be considered by the developer for the success of the development. Factors affecting investment decision in residential development 2007 Chapter 7: References Page 64 . Bank of England Working paper No 271 – “Consumption. (1994). (2003). 4. “The financial structure and ethos of property companies: an empirical analysis''. Israel”. and Matysiak. (1994). “Factors affecting housing modifications and Housing pricing: A case study of four Residential Neighborhoods in Hafia. Lavee. W.R. “Discovering Statistics using SPSS”. pp. 97-111. Towards a Viable Private Rented sector ( London. Vol. in: Whitehead. • Becker N. Yakov Odish and Larissa Fleishman. 46:1. “The private rental sector and housing policy in seven West European countries”.” • Barkham. (ED). & Van Der Heijden. 15 No. and D. • • Andy Field. LSE Housing) • Boris A. Hamilton and Leicester. Portnov. 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P.On the complementarity and substitutability of approaches”. Wrightbooks Pty Ltd. “Judgement under uncertainty: heuristics and biases''.. • Tversky. 2. A. • Thaler. Principles of Real Estate Appraising. No. (2000) Investing in Residential Property. J.A. “A bounded rationality framework for property investment behaviour”. D. 2003. pp. Vol. and Schwartz. Science. R. pp.3. Vol. (1997). 647-61. Ohio: Stanley Page 70 . Tversky. A.Factors affecting investment decision in residential development • 2007 Susan Flint-Hartle & Anne de Bruin.3. Vol. 185. Factors affecting investment decision in residential development 2007 Chapter 8: Appendix Page 71 . Factors affecting investment decision in residential development 2007 Appendix1: Management Service Questionnaire Page 72 . but outside the City Centre In the East Midlands Elsewhere in the UK Don’t know ANSWER THIS QUESTION IF YOU HAVE AN ON-SITE MANAGEMENT/CONCIERGE SERVICE.Factors affecting investment decision in residential development MANAGEMENT SERVICE 1. Page 73 . 6. 4. Is there a service charge for the upkeep of communal parts of the property? Yes No 2007 2. 5. how satisfied are you with the management in respect of: Very Fairly Not There are no Satisfied satisfied satisfied communal areas Cleanliness General maintenance Handling of requests/complaints Value for money ANSWER THIS QUESTION IF YOU DO NOT HAVE AN ON-SITE MANAGEMENT/CONCIERGE SERVICE. Thinking about the communal areas of your property. Is your management company located …? On-site In the Nottingham City Centre In Nottingham. Thinking about the communal areas of your property. how satisfied are you with the management in respect of: Very Fairly Not There are no Satisfied satisfied satisfied communal areas Cleanliness General maintenance Handling of requests/complaints Value for money How would you rate the importance of a management service within apartment blocks? High Importance Medium Importance Low Importance Which area of the management service would you most like to see improved? Please tick one only Cleanliness General maintenance Handling of requests complaints Value for money Other (please state) ___________________________________________________________ 3. etc. 10. Which other services are you likely to use in an apartment complex. Are you considering moving or buying another property within the next 2 years? Yes No Don’t know If your answer is yes go to question No 11. 2007 Please rate the probability of you purchasing a city centre apartment as your next move? Please tick one only Highly likely Likely Neither likely Nor unlikely Unlikely Highly Unlikely 8. watering plants whilst on holiday.Factors affecting investment decision in residential development YOUR FUTURE PLANS 7. will you purchase the property …? As an individual As an investor As a shared owner with a partner Page 74 . If purchasing an apartment. 1 Developer’s reputation Good access to public transport Location Close to recreation and leisure facilities Number of bedrooms Size of living accommodation On-site-management facilities Strong sense of community among neighbours Value for money Good on-site security Access to car parking Other (Please state) _______________________________________________________ 2 3 4 5 9. 11. if made available at a reasonable charge? Highly Likely Apartment cleaning Car valeting Laundry Ironing Key holding** Personal Shopping Gym Contract parking Storage facilities Car Hire Other (please state) _______________________________________________________ Likely Neither likely or Unlikely Unlikely Highly Unlikely **Taking delivery of groceries. where 1 = not at all important and 5 = extremely important. What are the important matters when considering your next move or purchase? Please tick the appropriate box. 000 .999 £30. administrative or professional Supervisor.£29.000 . junior management.£49. Please rate the probability of you purchasing a city centre apartment as your next move if interest rates move up to 6% from the current rate? Please tick one only Highly Likely Likely Neither likely or Unlikely Unlikely Highly Unlikely 19. Which of the following best describes the type of work you have in your main job? Please tick one only Senior management or professional Intermediate management. administrative or professional Manual worker (with industry qualifications) Manual worker (without industry qualifications) Self-employed How long have you lived at your current address? a) c) Less than a year Between 2 and 5 years b) d) Between 1 and 2 years 5 years plus 15.999 £20.£39. How many bedrooms do you have? _______ 1 2 3 Other please state 18.£19.000 .£59. What is your household annual income (before tax deductions)? £10. clerical. Please tick your relevant age band? 18 – 24 25 – 34 35 – 53 35 – 45 45 – 55 55 plus Are you currently working either full-time or part-time? (This includes any part-time working by students and those on training courses. How many people live in your household? Number of adults Number of children 17.Factors affecting investment decision in residential development As a shared owner with friend(s) As a shared owner with a housing association or similar association 2007 PERSONAL PROFILE 12.000 .999 £50. 14.) No Yes 13.999 £40.000 or over Page 75 .999 £60.000 . 16. FULLY COMPLETED QUESTIONNAIRES WILL BE PLACED IN THE DRAW AND THE WINNER TO RECEIVE £250 CASH.Factors affecting investment decision in residential development 2007 THE UNIVERSITY OF NOTTINGHAM WILL DETACH THIS PART OF THE FORM WHEN RECEIVED IN ORDER THAT THE QUESTIONNAIRES REMAIN ANONYMOUS. NAME ADDRESS : : TELEPHONE NO. : E-MAIL : Page 76 . Factors affecting investment decision in residential development 2007 Appendix 2: A sample response to: “Purchasing Questionnaire” Behaviour Page 77 . private or mixed Sense of community among neighbours Value for money On-site security Access to car parking 2 3 4 5 5. Please tick one only Highly Likely Go to question 3.e. Section A – Purchasing and Renting Profile & Preferences 1. shared ownership) What are the important matters when considering your next property to rent or purchase? Please tick the appropriate box. 1 Developer’s reputation Good access to public transport Location Close to recreation and leisure facilities Number of bedrooms Size of living accommodation On-site management services Development tenure. where 1 = not at all important and 5 = extremely important. with a mortgage or on a shared ownership basis and may also include residences available to rent privately or on an affordable basis (i. Page 78 . Please tick one only Highly Likely Neither unlikely nor likely Highly Unlikely Likely Unlikely Go to question 3 and then to question 5. Please rate the probability of you renting a property in the next 2 years.e.Factors affecting investment decision in residential development 2007 We are working with the Nottingham University Business School on a research project to understand how mixed tenure residential developments are perceived and what influences your decision to purchase or rent. Neither unlikely nor likely Highly Unlikely Likely Unlikely 2. We can assure you that all information received will be treated as strictly confidential. We would ask that you complete the questionnaire and return it to us as soon as possible. Will you be purchasing as: An owner-occupier An investor Through the New Homebuy Scheme (i. Mixed tenure developments include residences that are available to purchase outright. i. THANK YOU FOR TAKING THE TIME TO COMPLETE THIS SURVEY. What type of property will you consider purchasing/renting? Apartment Other ____________________ 3. Please rate the probability of you purchasing a property in the next 2 years.e. through a Housing Association or Local Council). House (please state) 4. employed and unemployed All affordable tenants are subject to rigorous vetting procedures prior to allocation 24 hour CCTV & security is present On-site management suite & concierge service is present An access control system is present The development is designed to keep the separate tenures in separate blocks. private rent & affordable rent Shared ownership & private rent Shared ownership & affordable rent Private rent & affordable rent Likely Unlikely Private purchase – purchase all of the property with or without a mortgage Shared ownership – purchase a share of the property with the assistance from a Housing Association or similar body Private rent – Renting directly from a private landlord Affordable rent – Renting from a Housing Association or Local Council 6. i. Please rate the probability of you purchasing or renting a property within a development that includes the following tenures … Please tick the most appropriate box for each statement Highly Likely Neither unlikely nor likely Highly Unlikely See definitions below Private purchase only Private purchase & private rent Private purchase & shared ownership Private purchase & affordable rent Private purchase.Factors affecting investment decision in residential development 2007 Other (Please state) _______________________________________________________ 5. shared ownership & private rent Private purchase. shared ownership.e. Neither unlikely nor likely Highly Unlikely Likely Unlikely Page 79 . Would you consider a development that included properties for affordable rent if … (Please tick the most appropriate box for each statement) Highly Likely All affordable tenants are employed All affordable tenants are key workers** There is a mix of affordable tenants. such as teachers. Page 80 .Factors affecting investment decision in residential development 2007 **A key worker is someone who works in a key public service. clinical NHS staff (excluding doctors and dentists) etc. police officers. fire fighters. Neither Agree Nor Disagree 2007 Agree Disagree Strongly Disagree Section B: Personal Profile 8. Mixed tenure apartment developments are desirable and sustainable. I would be willing to purchase in a mixed tenure apartment development. Mixed tenure is more suited in housing developments rather than apartment developments. The inclusion of affordable tenants within an apartment development will negatively affect the future value of all the apartments within that development.) No Yes Other ____________________ Page 81 .Factors affecting investment decision in residential development 7. I would be willing to rent in a mixed tenure apartment development. Please tick your relevant age band? Please tick one 18 – 24 25 – 34 Are you …? Male Female 35 – 44 45 – 54 55 plus 9. Are you currently working? (This includes any part-time working by students and those on training courses. Please tick the statement that you feel most relevant to each statement: Please tick one box for each statement Strongly Agree Mixed tenure should be introduced into residential apartment developments. 10. The inclusion of affordable tenants within an apartment development will positively affect the future value of all the apartments within that development. £59.000 or over PLEASE USE THE SPACE BELOW TO PROVIDE ANY OTHER COMMENTS: Page 82 . Which of the following best describes the type of work you have in your main job? Please tick one Senior management or professional Intermediate management.Factors affecting investment decision in residential development 11.000 .£29.000 .999 £50.999 £40. clerical.£39. administrative or professional Supervisor.999 £60.999 £30.999 £20.000 .£49. junior management.000 .£19. What is your household annual income (before tax deductions)? Please tick one £10. administrative or professional Manual worker (with industry qualifications) Manual worker (without industry qualifications) Self-employed 2007 12.000 .