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This book is a theory-led conceptual account of the Principal-Agent problem and related concepts of Behavioural Real Estate economics, a decade after the real estate crisis of 2008. Data from 52 qualitative interviews undertaken with appraisers, real estate brokers, and property owners is used to argue that the reality is more nuanced and influenced by the interests of the different real estate market actors. The book provides a sketch of the relationship dynamics between real estate investors and service providers in the markets of Austria and Central and Eastern Europe.
While the investors manage real estate portfolios and have to deal with particular legal systems, regulations, and norms, they often appoint service providers who have a comprehensive understanding of the local context. This work aims to highlight that this relationship between the real estate market actors creates an information asymmetry that may constitute the basis of conflicts of interest as well as Principal-Agent problems. Furthermore, the work underlines that the services provided by appraisers and real estate brokers to investors may strongly influence the profit the investor can generate from a transaction. It could be therefore inferred that the investor inclines towards a certain type of result from a service provider over the others. The present research has revealed that the investors are guided by certain interests and undertake to steer the service providers in a favoured direction. This book is essential reading for anyone interested in the nuances of Behavioural Economics and real estate.
Dr Alina Nichiforeanu is Senior Manager in the Transaction Real Estate division of Ernst & Young Austria. She holds a Doctorate in commercial real estate valuation from the Vienna University of Economics and Business. She also attended further programs in real estate management at Harvard Business School. She is a member of the Royal Institute of Chartered Surveyors. Dr Alina Nichiforeanu has over 16 years of experience in the Austrian and Central and Eastern European (CEE) real estate markets, assessing current business environments, acting as a bridge between companies' headquarters and subsidiaries, and leading intercultural teams. She has a proven track record of successfully concluded transactions, optimizing and repositioning distressed commercial real estate assets, as well as construction and leasing projects, with a robust global network. Her areas of expertise are asset and portfolio management, transactions and M&A's, property management, as well as corporate real estate, gathered at multinational companies in Austria and the CEE region.
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