The Incorporated Society of Valuers and the RICS are funding research by IPD into the performance of the secondary market and, although this project is still in its infancy, I hope very much that you will support these efforts as the project develops. Indeed, on the basis that transparency generally improves the performance of markets, I would, personally, support John Ritblat’s opinion that commercial transaction prices should be made public through the land register. Some of you would lose proprietorial advantage as a result in the short term, but in the long run a more liquid market benefits the most professional more than the free riders. 12 It would, however, be rash to conclude that the market is now unambiguously healthy in all respects. There are still several factors which will continue to pose challenges to the investment, banking and valuing communities. For example, while lease lengths may have temporarily stabilised, break clauses exercisable by tenants are becoming more common. And despite the positive tone of the recent CBI/Grimley survey, it is clear too that many occupiers will continue over the long-term to reduce their needs for space and to demand greater flexibility. Privity of contract has disappeared on new leases. All of these factors are making it less straightforward to form a view of the quality of cashflow likely to stem from a particular building. 13 There is a sizeable overhang of unlet secondary property.
Perhaps from your point of view it should be called insourcing. If risks are properly identified and priced, the PFI potentially can provide the longerterm bond-type investments that many of you are seeking. It offers great opportunities to all of you. This revolution has only just begun. 20 A third issue that is particularly relevant now is technology. It has undoubtedly contributed to property obsolescence. But technology is potentially an important ally, and in more senses than one. Developments in building and construction techniques, as well as smaller and more powerful machinery and computer technology, facilitate the construction of buildings BIS Review 11/1997  -5-  that meet occupiers’ needs. Information technology enhances the usability and efficiency of property as an asset class. Just as Mr. Otis made skyscrapers possible, one of you will create completely new configurations of site exploitation - or develop new and integrated relationships between different buildings. The automobile and advertising have entirely altered the shape, size, appearance and location of shops in the USA - and to a lesser extent here. But today’s offices still look pretty much to me like those designed by Frank Lloyd Wright. Is there scope for an IT driven revolution in the next eight years in which the working environment is transformed into a virtual reality? I do not know but I am convinced we ain’t seen nothing yet. 21 The fourth factor could make an important difference - greater market liquidity and instruments such as derivatives which will facilitate short-term tactical positiontaking or investment.