Providing the tools for success
Education is at the heart of what the Investment Property Forum is trying to achieve and the organisation has a crucial mission to ensure property professionals can communicate in the wider investment arena. Research by the IPF, carried out seven years ago, identified a number of skill shortages suffered by UK real estate professionals in key areas, notably investment theory and finance. In response, the forum came up with an education programme it hoped would ensure members and others had access to a wide variety of educational opportunities.
Broadly speaking, the aim of the IPF’s education programme is to:
q Improve the skills and knowledge of IPF members and others and to engage them in debate about issues affecting real estate investment;
q Seek to ensure that, either through its own efforts or through the work of others, that the best quality real estate investment education is provided in the UK where a need is identified;
q Provide a wide range of formal education relevant to real estate investment, for IPF members and others in the UK and, where appropriate, abroad;
q Provide education for the general investment community and other relevant parties about real estate investment.
The core of the IPF’s educational offer is the advanced education programme (AEP), run by the Cambridge International Land Institute, a series of modules for experienced professionals which, if taken together and assessed, can lead to the IPF diploma. Each module lasts three to four days and is backed up by online and distance learning resources. The programme is not meant to be undertaken by inexperienced surveyors, but by qualified professionals with at least two years post-qualification experience. The course is not cheap: each module costs at least £995 (€1,445).
John Story, head of real estate at Unilever Pension Fund and chairman of the IPF’s academic faculty says: “When we first looked at this in 1997 with the skills and standards report a perceived gap in skills was identified. There was a gap between property people and those working in other investment markets. We looked at the skills required in property markets, particularly with regard to property investment. The original modules were created to address these in some depth.”
Since then, Story says there has been “huge catching up”, narrowing the gap between the skills of property investment professionals and their counterparts in equities and fixed-income. “As well as the AEP, property courses in universities have been adding breadth and depth since the late 1980s,” he says.
The seven core modules are:
q real estate as an asset class;
q accounting and taxation for real estate investors;
q introduction to investment valuation and portfolio theory;
q financial instruments and investment markets;
q advanced real estate investment appraisal;
q advanced real estate finance and funding;
q advanced portfolio management.
As an example, the financial instruments and investment markets module examines the investment characteristics of the asset classes available to UK investors. The different types of investment instrument are examined, together with the way in which they are valued and traded. The module includes an introductory study of indirect real estate investment and its comparability with direct real estate investment. Students study the more esoteric products such as securitisation and derivatives as well as direct and indirect investment in real estate.
New this year is an international real estate investment module, a reflection of the way real estate investors and advisors are looking outside the domestic market. The module is aimed at professionals working in the international markets, from both the UK and Europe and is led by Ben Sanderson, a director in Prudential Property Investment Managers’ research team. The course covers differences between regional real estate markets – such as transparency, valuation methods, legal structures and tax regimes. It also examines recent trends, capital flows and investment options and looks at how an international portfolio can be developed and what it brings to an investor.
Sanderson says: “It’s impossible to cover everything about every market in the world in a three day course, but we look at the major issues and make sure people are aware of what issues are current in markets worldwide. With valuation methods, we won’t take an in-depth look at how real estate is valued in every market, but highlight some of the major differences in major European, American and Asian markets.”
Learning for the day job
Ciaran Carvalho is not the sort of person you might expect to be in need of more education. He is a partner and head of real estate at law firm Dechert, based in London, and has a client list that includes UK developer Chelsfield, ING Real Estate, Land Securities and Starwood Capital.
However, having legal rather than real estate training, Carvalho felt the AEP course could deepen his understanding of how real estate works. “I wanted to be able to understand the thinking behind the deals,” he says. “To see how the numbers in deal were arrived at and understand the business reasons for it, not just dealing with the legal framework.”
After starting out with just one module, Carvalho got the bug and opted to take the diploma and to take the associated examinations (which is not compulsory). He found some sections of the course a little heavy on the maths side, especially when students were told they had to work without the benefit of Excel, which he describes as “real torture” and claims to be unsure how he managed to pass it.
“I’m not sure how useful that part of it was to me as a lawyer, but overall the course was excellent and what I learned has been very valuable – in fact you don’t realise how useful it is until you’re back in the middle of your job again and find you understand things much better.”
Carvalho says the UK market is “pretty switched on” in terms of its understanding of real estate, ahead of continental Europe, but he adds that all of Europe is behind the US. “They are more numerate, more financially aware and better at modeling than us,” he says. “We still need programmes like the AEP to bring us up to speed.”
Jeremy Titchen, commercial director at developer Grosvenor Group, came a long way in the property business without extensive formal education. He turned down a university place to study geography in order to get more work experience in the building trade, which led to qualification as a quantity surveyor. He then began working in project management, which led to his present involvement in development.
“It was fantastic,” he says. “It was very hard work, but very relevant and there were always good quality people coming in to lecture. I needed to put the knowledge that I’d gained previously in a more structured framework.
“It’s definitely worked – things from the course come up all the time. In fact it became a standing joke, that every time I was in a board meeting, I would come up with a point or suggestion that obviously came from the course!”