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Abstract

In an age where the financial sustainability of local authorities in England is ambiguous, it is imperative that academic staff and the wider population understand collectively as to why local authorities in the South East of England acquired a multitude of commercial investment properties between 2016 and 2020.
This dissertation identified the drivers behind the investments, examined the methods of funding used to acquire the investments, assessed the benefits and risks involved in the investments and offers guidance on how local authorities can minimise the risk of investment henceforward.
The research methods consisted of an extensive review of available and relevant literature on commercial property investment as a topic, before funnelling down to local authority investment, coupled with the collection of primary data by way of semi-structured interviews and a case study.
The main findings from this research show that local authorities are under immense pressure to continue to provide statutory services, despite significant reduction in funding from Central Government. Consequently, local authorities have borrowed a substantial amount of money in order to fund commercial property investments to generate an income which will bridge the funding shortfall.
This funding shortfall is sizeable in nature, and therefore local authorities have pursued assets which provide a higher return; however, fundamental to investment is the theory of risk and return, and typically assets which provide higher returns result in higher risk. Hence, local authorities are exposed to higher risk.
Consequently, this dissertation recommends that local authorities employ and retain the appropriate skillset to correctly manage their investment portfolios henceforward, utilising proven and reliable portfolio theories and measurements as a risk mitigation method.

Course: Real Estate Manaqement - MSc - P272FTC

Date Deposited: 2022-03-04

URI/permalink: https://library.port.ac.uk/dissert/dis13859.html