Homogeneous commercial property market groupings and portfolio construction in the United Kingdom

F Hamelink, M Hoesli, C Lizieri, B D MacGregor

Research output: Contribution to journalArticle

47 Citations (Scopus)


Property portfolios are traditionally constructed by diversifying across geographical areas, property types, or a combination of both. In the United Kingdom it is normal practice to use regions rather than towns or local market areas as the geographical divisions. The authors use cluster analysis to construct homogeneous groups from 157 UK local markets, by means of commercial property returns. The results show strong property-type dimensions and only very broad geographical dimensions in the clusters. These clusters are found, in general, to have temporal stability with changes in cluster membership being explained by the changing economic geography of the United Kingdom. The cluster-derived groupings are used to derive efficient investment frontiers and are compared with frontiers based on conventional heuristic groupings. It is shown that strategies based on parsimonious cluster-based groupings, appropriate for smaller investors, generate results that are comparable with those of conventional groupings and capture the main drivers of property performance.

Original languageEnglish
Pages (from-to)323-344
Number of pages22
JournalEnvironment and Planning A
Publication statusPublished - 2000




Dive into the research topics of 'Homogeneous commercial property market groupings and portfolio construction in the United Kingdom'. Together they form a unique fingerprint.

Cite this