The report, 'Financial Innovations in the UK Property Markets,'says new financial techniques are becoming more common. Debt- andasset-backed securitisations like British Land's £1.5 billion($2.175 billion) deal at Broadgate in the City, are an increasingpart of the property investor's armoury. At the same time, newsecuritised investment vehicles are emerging.

In part, this reflects the globalisation of the propertyindustry with most large UK agents now part of world-widealliances, claims the report. And it also says that the increasingrole of investment banks and management consultancies in the sectorhas brought in experience from other capital markets.

However, the report criticised conventional valuation methodsfor preventing the benefits of this new flexibility from beingshared with property occupiers. 'Traditional valuation methodsunderstate the investment worth of shorter or non-standard leaseswhen compared to modern pricing methods,' it notes. 'Since assetvaluation is fundamental to the development of active securitiseddebt and derivative markets, this presents a constraint toinnovation.'

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