UK Real Estate Essay Example | Topics and Well Written Essays - 4000 words

UK Real Estate - Essay Example These market-specific characteristics present reliable indicators regarding the UK economic status. The UK real estate sector forms part of the services sector. The main definition of service sector output pertains to the non-tangible, non-commodity aspects except agriculture, mining, construction and manufacturing. The services sector has four broad classification of services based on the national accounts: Distribution, hotels and catering (DHC); Transport and communications (T&C); Finance, real estate and business services (FRB); and government and other services (GOV) (Julius and Butler, 1998). The services sector has grown faster than the rest of the UK economy from 1970-97. For instance, the average yearly rates of growth for the service and manufacturing sectors were 2.6% and 0.7% respectively. Marketed services have registered yearly growth rates of 3% during the same period. Growth has been tremendous in financial services, business services, real estate activities, education and health services, and communications, particularly in computer software and cellular telephony (Gibson and Barkham, 1999). Boltho (2010) projected that the potential output growth averaged 2.9% a year over the last cycle that chalked up a faster growth compared to the previous cycle (2.4% a year; 1986-1997). The acceleration could be traced to exceptional factors: strong net inflows of migrants, a slight decline in the NAIRU (Non-Accelerating Inflation Rate of Unemployment), capital deepening and a trend towards high value-added sectors including financial services. The growth of the UK real estate property portfolio is also influenced by the level of technology on shopping trends, evolving consumer preferences, and the UK government intervention in project management and transportation. Real estate investment decisions respond to the current and future needs of the core business (Nourse and Roulac, 1993). A real estate company enters projects to generate a positive net present value for shareholders. This company will have the best opportunities for creating shareholder value within their portfolio of property assets. The opportunities come in the form of valuable development options, the exploitation of present market information and the utilisation of a well-developed property expertise. Amidst the need to attain net present value from property activities are some factors that may be deleterious to shareholder interests. These negative factors cover conflicts of interest between retail and property activity, negative reaction by external par ties such as shareholders, opinion formers, and analysts and an actual lack of genuine property investment expertise. The costs and benefit aspects of diversification into property activity explain the wide variation in property strategy and structure of this sector. The UK's economic cycle has been volatile compared to the other countries of the European Union, reflecting different economic policies, oil price rises and German unification. The UK economy exhibits different trade patterns, oil, company finance and the housing market. The UK government said a period of stability through low inflation and tight fiscal spending is essential so as to enable a sustainable and durable convergence with the rest of the European U