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SOCIOLOGY
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IX SEMESTER, B.ARCH
Table of Contents
SECTION A: BUILDING ECONOMICS
1. Introduction to economics
1.1 Broad features of economics...................................................5
1.2 Macro and micro economics...................................................10
1.3Money and banking functions..................................................13
1.4Factors of production...............................................................22
2. Land economics
2.1 Land economics: Land as limited resource.............................25
2.2 Land development and conservation.....................................27
2.3 Public policies on land utilization and development...............31
2.4 Theories of land values...........................................................34
2.5 Acts.........................................................................................37
3. Building economics
3.1 Architectural aspects of building economics...........................45
2.2 Rent control and other building acts......................................55
2.3 Economics of high rise buildings............................................60
SECTION B: SOCIOLOGY
4. Man and his environment
4.1 Man and his social environment..............................................63
5. Urbanisation
5.1 Trends and characteristics.......................................................74
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5.4 Study......................................................................................90
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d) Specialisation
Specialisation results from division of labour, a result of the problem of
scarcity. Its aim is to increase the productivity of labour to produce more
goods and services with a given level of capital. This will in turn increase
the ability of people t o satisfy their material wants.
e) Exchange
Exchange complements specialisation. Any commodities produced must
be bought and sold to help economic growth. There must be a ready
market for those commodities produced otherwise specialisation would be
of no benefit. The principle on which exchange is based is called the Law
of Comparative Advantage. It states that it is beneficial if one
specialises in the production of the commodity in which he/she is more
efficient. International trade is based on this very simple principle.
f) Equity or Income Distribution
Equity is the distribution of income in society and suggesting how poor,
disadvantaged people can be helped without harming the economy.
Evaluating income distribution is a fundamental element of modern
economics.
Traditional economies
Custom and habit forms the cornerstone of the system of solving
the economic problem. It is reinforced by superstition and religious
belief s and is common in some developing countries.
Market economies
There is predominantly private owner ship of economic resources. T
he allocation and distribution of economic resources is determined
by production, sales and purchase decisions taken mainly by firm s
and households through the market forces of demand and supply.
Command economies
This is a centre of all planned economy where most decisions about
the ownership, allocation and distribution of resources are taken by
the central authorities. Firms and households produce according to a
plan drawn up by government bureaucrats. Competitive markets
are not usually allowed to f unction.
Mixed economies
This is where t he economic system is a combination of some or all
of the other three systems. It may include some level of a market
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g) Economic Systems
Another way to combat the problem of scarcity is to organise production
and exchange into an economic system. An economic system has two
elements: the forces of production; and the relations of production. The
forces of production include tools, factories, equipment, production skills,
and the level of knowledge of the labour force, natural resources, and the
general level of technology. The relations of production are the social
relationships between humans, particularly the relationship of each class
of humans to the means of production. The basic types of economic
systems or organisations are usually described as:
2.
The first resource is land. Even if you are producing a service, you will
need somewhere to organise your work and do the necessary
administration, such as invoicing your customers and so on.
Manufacturers of a product have an even more pressing need for land, as
they will require a production site or factory location with storage for
supplies and parts. This means using the land resources of an economy.
The next resource labour, it's no good going to all the trouble of
acquiring the location where we'll make the extra goods and services if we
have no labour to carry out the work.
Economic growth is measured in changes in what is called 'gross domestic
product' (GDP). This is a measure of everything that has been produced in
an economy.
Barriers to economic growth
We have seen earlier that the ability to grow an economy depends on
using more resources (land and labour, for example), or on more efficient
use of these resources.
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The correct term for the resources used is: factors of production. There are
four factors of production: land, labour, capital and enterprise. Economic
growth depends on the quality and availability of these factors. If any of
the factors of production suffers from a lack of quality or availability, then
economic growth will not be as great as its potential. So what can cause
these factors of production to be of low quality or unavailable?
Other barriers exist that can hamper countries' ability to grow their
economies. They may be unable to gain access to export markets, due to
the trade policies of other countries. In order to protect their own
domestic producers, many countries block the imports of goods or
services from other parts of the world.
The World Trade Organisation (WTO) is a place where member
governments go to sort out the trade problems they have with each other.
Less developed economies
Less
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The 'one size fits all' view of economic development prevents subtle
differences in the routes chosen to development.
The homogenised global culture that some observers say has arisen.
Reference
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http://www.bized.co.uk/learn/economics/notes/features.htm
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Application:
To understand why the overall flow of output and income fluctuates; what
factors lead to the growth in the productive capacity and what are social
and economic cost of economys growth, it is necessary to study the field
of aggregate economics i.e., total output income. Another name for the
aggregate economics is macro economics. The main topics covered under
this branch is study of national income analysis, the statistical
measurement of such aggregate flows as the gross national product
national income, consumption and investment and establishing
systematic relationships, which can explain the change in the aggregates
over time. Thus macro economics concerns the determinants of the
performance of entire economics of nations, groups of nations and the
whole world. [2]
Theory
theory
costs.
Theory
Theory
While the economic study is concerned with the working of only one part
of the economy at a time and effects of a change in some variable on
other are analyzed on the assumption that rest of the economy during
that period is at a standstill; other things remaining the same, it forms a
part of the problems in micro economics.
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The concept may be made clear at the very outset that a separate study
of Macro economics and Micro economics is absolutely necessary because
there may be inherent contradictions between the laws of micro
economics and macro economics. What might be right policy of an
individual, a firm or an industry may not be right for the economic system
as a whole. In fact, the mere aggregation of the laws of behaviour of the
individuals, or firms will not hold good for the study of macro economics
because there are disharmonies between the behaviour of individual units
and the behaviour of economic system as a whole.
Since all modern economies are money economies (i.e., income, wages,
interests, rents, dividends and taxes, etc., are in terms of money), the
economic system can be considered as a system of money flows. The
money flows have their counterpart in real flows of goods and services.
Therefore the working of the economic system can be studied by following
the route through which the money flows or real flow money. [3]
Application:
Price theory is the main tool of microeconomics because the properties of
market supply and demand functions are generally built up from
assumptions about the actions of households or firms. The overall
magnitude of output also affects the composition of output because it may
be seen that during depression when the output falls, the output of
durable goods declines more than non durable goods and more than
services. Profits fall more than wages and the wages fall more than the
interest. Thus economic theory is generally considered to be micro
economic when it is based on assumption about behaviour of the
consumers and the producers or householders and firms the ultimate
decision makers. Analysis of consumption, investment and labour supply
behaviour of a household firm is an example of micro economics. [4]
Reference
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Characteristics of money:
ii.
iii.
iv.
v.
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Types of money:
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burdensome. Fiat currencies gradually took over in the last hundred years,
especially since the breakup of the Bretton Woods system in the early
1970s.
1. Commodity money
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Banks:
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[6]
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1. Private Banks
Private banking is, perhaps, the oldest form of banking, and some of the
most powerful banking concerns in the world to-day are private
institutions. They are distinguished from public or incorporated banks in
that they are conducted as individual or partnership enterprises, and that,
until recently they have not been subject generally to the supervision of
the state. The tendency in recent years has been toward public regulation
of private as well as incorporated banks. In several states, private banks
are now forbidden to use a corporate name, or to use the name "bank' or
any similar title. Some states require private bankers to have a minimum
capital, and in a few Eastern states certain classes of private bankers are
required to post a bond. In a few states the banking business is absolutely
denied to unincorporated concerns.
Private Banks perform two principal functions:
(1) As an adjunct to the brokerage business in large cities.
(2) As a means of supplying banking accommodations in small
communities where a state or national bank would not be profitable.
In larger cities their main business is dealing in securities, foreign
exchange and foreign loans. Some of the larger banking houses have been
prominent in recent years in promoting large industrial combinations and
consolidations, and in underwriting stock and bond issues. Generally
speaking, they do not make a practice of discounting commercial paper,
making business loans, and accepting checking deposits as commercial
banks do. In the smaller communities, having only meagre banking
facilities, they do perform this service.
Public or chartered banks are created by the state or Federal Government,
which usually exercises some supervision over them. Savings banks, trust
companies, and state commercial banks are chartered, that is, licensed to
do business, by the several states; national banks are chartered by the
Federal Government, under the terms of the national banking act and its
amendments, and the Federal reserve banks are also chartered by the
Government. In the early days of banking, each bank was created by a
special charter granted by the legislature; now, nearly all the states have
a general incorporation or banking law by complying with the terms of
which a group of men proposing" to establish a bank may set a charter. [7]
2. Savings Banks
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Savings banks are of two general kinds: mutual and stock. The mutual
savings bank has no capital and consequently no stockholders. It is
organized for the exclusive benefit of the depositors. Apart from the
expenses of running the bank, the depositors get all the profit arising from
the investment of their deposits. In the stock savings bank, which has a
capital and stockholders, the profits of the business, over and above the
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There is little or no justification for the popular opinion that national banks
are safer and sounder than state banks. Most of the states now have
excellent banking laws, which in many instances are modelled upon the
national banking law. The percentage of failures among state banks is only
a trifle higher than among national banks. The soundness of a bank
depends, not upon the authority which issues its charter, but upon the
ability and honesty of its management and supervision. [10]
References:
1. http://en.wikipedia.org/wiki/Money
2. http://www.informationbible.com/FunctionsOfMoney.html
3. http://www.moneyandyouth.cfee.org/en/resources/pdf/moneyfunct.p
df
4. file:///D:/acedamics/ix%20sem/b.e.s/money%20and%20banking
%20concepts/Bank.htm
5. file:///D:/acedamics/ix%20sem/b.e.s/money%20and%20banking
%20concepts/FUNCTION%20OF%20BANK.htm
6. http://chestofbooks.com/finance/banking/Money-And-BankingHoldsworth/Chapter-X-Functions-Of-The-Bank-75-Classification-OfBank.html
7. http://chestofbooks.com/finance/banking/Money-And-BankingHoldsworth/76 Private-Banks.html
8. http://chestofbooks.com/finance/banking/Money-And-BankingHoldsworth/77-Savings-Banks.html
9. http://chestofbooks.com/finance/banking/Money-And-BankingHoldsworth/Chapter-XIX-Trust-Companies-152-Functions.html
10.
http://chestofbooks.com/finance/banking/Money-And-BankingHoldsworth/79-Commercial-Banks.html
Land
Labor
Capital
Enterprise
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therefore, the meaning of `land' is broader than its usual meaning. The
payment for land use and the received income of a land owner is rent.
Below are some of the characteristics of land:
a)
b)
c)
d)
e)
Limited in supply;
No costs of production;
Varies in quality;
Has a wide range of alternative uses;
More productive land is in greater demand.
Labour includes all human resources physical and mental, available for
the production of goods and services. It may be unskilled, semi-skilled, or
skilled, and local labour markets vary in the size and nature of the pool of
labour. The payment for someone else's labor and all income received
from ones own labor is wages.
The supply of labour is the number of hours which people are willing to
work for a given wage-rate over a period - say a year. The supply of labour
will, therefore, depend on the number of workers found multiplied by the
average number of hours worked by each worker. Ability and willingness
to work do not, in themselves, guarantee employment. Job creation
depends on the expansion of the economy. The supply of labour must also
consider the quality of labour and how efficiently the workers do the tasks
given to them. The efficiency of labour depends on education and
knowledge of the work force, motivation, working conditions and social
welfare.
Capital is a man-made resource. The term capital in economics is all
man-made aids to further production. Examples of capital are buildings,
machines and other equipment, which are used in making the goods we
consume. Capital may be considered under various categories: fixed
capital; working or circulating capital; financial capital; social capital;
individual capital; and natural capital including renewable and nonrenewable natural resources.
a) Fixed capital includes machinery, factories, equipment, new
technology, buildings, computers, and other goods that are
designed to increase the productive potential of the economy for
future years.
b) Working capital includes the stocks of finished and semi-finished
goods that will be economically consumed in the near future or will
be made into a finished consumer good in the near future. These are
often called inventories. The phrase "working capital" has also been
used to refer to liquid assets (money) needed for immediate
expenses linked to the production process (to pay salaries, invoices,
taxes, interests...)
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2. LAND ECONOMICS
2.1
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Land is a natural resource which yields some income and has some
exchange value .Land economics is a branch of the economics which
focuses on the use of land and the role of land in economics. It often
intersects with environmental economics, since land use policies have an
impact on the health of the environment, and many land economics trade
journals focus on the environmental ramifications of land-use around the
New developments:
Some basic principles of physical planning to ensure land use economy as
well as economy in cost of development of land which need to be further
researched and studied for practical adoption are:
ECONOMICAL SPACE NORMS:
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1.
2.
3.
4.
HEALTHFUL HOUSING
COMMUNICATION FACILITIES
ADVANCES IN CONSTRUCTION TECHNOLOGY
COMMUNITY PARTICIPATION
Land itself is a resource like labor or capital, especially when the land
harbors deposits of natural resources like minerals, oil, or timber. It is also
a fixed resource: the amount of available land on Earth is finite, although
land speculation may create situations in which the supply of land cannot
meet the demand. The way in which land is used can have a profound
impact on a local or national economy, whether that use is urban or rural.
Public and private uses of land and their sometimes conflicting needs are
also of interest in land economics.
One of the fields of focus in land economics is the allocation of land. As a
fixed resource, land's value is dictated by its availability, and the
allocation of land resources can play a critical role in how land is treated.
In packed cities, for example, land can be scarce and difficult to obtain,
and it has a correspondingly high price. In rural regions, however, land
may be very inexpensive due to decreased demand. Or, demand for land
which can be used as housing may inflate the prices of farmland, making
it difficult for farmers to buy or retain land for farming use.
Researchers in this field may look at issues like government acquisition of
land to satisfy right of way requirements for roadways and utilities, and
land use policies which force land to remain unoccupied and unused for
large stretches of time. They also look at how land can be made more
profitable, and how land values shift over time in response to a variety of
factors including market pressures and the discovery of natural resources.
The study of land economics is often closely wrapped up in politics,
especially politics on a local scale. Powerful planning commissions and
lobbies may be able to push the nature of land use in their communities,
shaping land use policies and the economics of locally available land in
ways which sometimes surprise economists. Regional and national
governments also play a role in land economics, by establishing policies
which are designed to balance the needs of individuals against the needs
of the government and the population as a whole.
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Land itself is a resource like labour or capital, especially when the land
harbours deposits of natural resources. It is also a fixed resource: the
amount of available land on earth is finite, although land speculation may
create situations in which the supply of land cannot meet the demand.
The way in which the land is used can have a profound impact on a local
or national economy, whether that use is urban or rural. Public and private
uses of land and their sometimes conflicting needs are also of interest in
land economics.
One of the fields of focus in land economics is the allocation of land. As a
fixed resource, land values is dictated by its availability, and the
allocation of land resources can play a critical role in how land is treated.
In packed cities, for example, land can be scarce and difficult to obtain,
and it has a correspondingly high price. In rural regions, however, land
may be very inexpensive due to decreased demand. Or, demand for land
which can be used as housing may inflate the prices of farmland, making
it difficult for farmers to buy or retain land for farming use.
Researchers in this field may look at the issues like government
acquisition of land to satisfy right of way requirements for roadways and
utilities, and land use policies which force land to remain unoccupied and
unused for large stretches of time. They also look at how land can be
made more profitable, and land values shift over time in response to a
variety of factors including market pressures and the discovery of natural
resources. [1]
Land development:
Land development refers to altering the landscape in any number of ways
such as:
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The conversion of land from one use to another is the generally accepted
definition of land development. [2] This age old process began with ancient
societies organised themselves into tribes, on and claiming land, forming
villages and primitive towns, for the mutual protection and livelihood for
all. The great civilisation of Egypt, Greece and Rome can be traced to
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Step2
Site analysis determines the allowable use of the site based on local
master plans, codes and ordinances and recommends a course of action
to accomplish the development program with respect to those documents.
Feasibility review and site analysis are usually performed concurrently,
these studies result in a complete site inventory, identify usable site area
and form the foundation of further design efforts through provision of
adequate base mapping and establishment of project goals.
Step3
Conceptual design presents the initial organisation of the development
program.
Step4
Schematic design is a refinement of the initial concept sketches that adds
scale, dimensions and precise testing of specific uses, including building
arrangements and infrastructure systems.
Step5
Final design is the conclusion to the primary design effort. Carried out
predominantly by engineers, preliminary plans are enhanced with a level
of detail sufficient to construct all aspects of the project
Step6
Plan submission and permitting represent the formal regulatory review of
final design (construction) documents by all governing agencies as well as
application for procurement of all necessary site and building permits.
Step7
Construction is the final step in land development process. During
construction the land development consultant is a valuable resource for
both the client and the contractor and is often responsible for stake out,
reviewing submittals, shop drawings and RFIs, certain inspections and
field and formal revisions. [4]
Land Conservation:
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often result in diversion from one use to the other. Diversion of land from
agriculture to non-agriculture uses adversely affects the growth in
agriculture sector. Even the available land is subjected to soil erosion of
varying degrees and degradation problems of different magnitudes. [5]
Land being the major non renewable natural resource is inelastic in
nature. There is lot of pressure on land due to the increasing population
from the agricultural, industrial and housing sectors. On the other hand,
the land is subjected to soil erosion and land degradation problem due to
rain and wind action and faulty cultivation practices resulting in loss of
topsoil, which is the place where all nutrients are available. This leads to
poor yields, uneconomic returns, reservoir sedimentation, and reduction in
storage capacity, and shutdown of hydel power stations, ecological
imbalance, environmental pollution, draughts and floods. Hence the
conservation, development and management of the land resources which
ensures the physical and chemical and biological health of soil profile is of
prime importance.
In a predominantly agricultural system, the objective of improving the
productivity, profitability and prosperity of the farmers and achieving
agricultural development on an ecological sustainable basis can be
attained only when conservation, development and management of the
land resources are assured. [6]
Conservation action provides benefits such as opportunities for active
outdoor recreation, and for the appreciation of landscapes and the historic
heritage.
Public conservation land and other natural areas also contribute other
often overlooked products such as clean water supplies, and the benefits
such as the regulation of the effects of flooding, erosion and climate
change. [7]
References
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1. http://www.wisegeek.com/what-is-land-economics.htm
2. http://en.wikipedia.org/wiki/Land_development - Pg-2
3. Land Development Handbook, Planning, Engineering & Surveying/
Dewberry, Third Edition,Chapter-1- Overview of The Land
Development Process, Pg- 3
4. Part-1- Overview-Pg-1
5. http://www.tn.gov.in/spctenthplan/CH_9_4.PDF
6. http://www.tn.gov.in/spc/annualplan/ap2004-05/ch9_4.pdf
7. http://www.doc.govt.nz/conservation/threats-and-impacts/benefitsof-conservation/economic-impacts/
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The following constitute the vital sources of urban policy matters in India.
Reports/papers
government
Five year Plans
Legislation
(i)
(ii)
(iii)
(iv)
brought
out
by
the
central
or
State
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1. Town
Planning
Legislation
including
Urban
Development Authority Acts: To control the use of land
with a view to regulate its planned growth and
development.
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Land value can be considered in two contexts. One is the market value,
which is the price of a land parcel negotiated at the time of sale of the
parcel, and the other is the assessed value, which is the estimated worth
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Yes, the current financial crisis highlights how scholars need to recast the
economic theory that they teach. The key concept that is missing today is
LAND VALUE. Classical economics divided factors of production into three:
land, labor, and capital. Beginning around 1920, scholars conflated land
with capital. This left them totally unprepared to cope with or explain the
crash of 1929. At this time "macro-economics", as we now call it, rose to
the fore. For a time it eclipsed "micro-economics", which had degenerated
into the explanation of the allocation of resources among competing ends.
Gradually, micro-economics came back to be integrated with macro, but in
the
process
land
value
almost
disappeared.
Scholars have "disappeared" land values in two main ways. One is to
conflate them with values of man-made capital, overlooking or trivializing
all differences. One obvious fault in this is that interest rates and land
rents vary inversely.
The other way is simply to trivialize land values as a quantity. This is
based on no respectable quantitative research whatever, and a systematic
ignoring of research showing land values to be a major element of wealth.
When it comes to the dynamics that lead to crises like that of 2008, land
values move in cycles of high amplitude, much higher than the values of
reproducible capital. When values are high and rising they lead to great
excesses of urban sprawl. These excesses fructify vast new areas around
growing cities, resulting in an overhang of "ripening" land that far exceeds
possible demands, resulting in a crash.
As to teaching money and banking, few or no texts recognize that
expanding banks, by taking land under and around speculative
developments, in effect "monetize" those speculative land values. When
the wave of land values ebbs, and debtors default, banks have to
contract, as they are now. Yet economic theorists, and those statesmen
whom they have trained, attend mainly to the froth on the waves, ignoring
the basic wave of land value that drives the cycle.
Another and related fault in theory is to ignore the turnover of capital. In
a boom of land values, capital goes into investments that pay out slowly.
The basis of allocating loans is not marginal productivity, but collateral
security, as perceived by bankers who do not distinguish land from
capital. The loan turnover of banks slows down, because a bank, no
matter how positive its balance sheet, cannot lend much faster than its
debtors repay their loans. The result is to slow down new loans and seize
up
the
system,
as
we
see
today.
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Tax theory is now based on the fallacy that a progressive tax must also be
one that suppresses and distorts incentives. This reflects economists
ignoring the high concentration of the ownership of land, and the positive
Reference
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2.5 ACTS:
Land Use and Building Act (132/1999, amendment 222/2003 included):
General objective of the Act:
The objective of this Act is to ensure that the use of land and water areas
and building activities on them create preconditions for a favourable living
environment and promote ecologically, economically, socially and
culturally sustainable development.
The Act also aims to ensure that everyone has the right to participate in
the preparation process, and that planning is high quality and interactive,
that expertise is comprehensive and that there is open provision of
information on matters being processed.
Objectives in land use planning
The objective in land use planning is to promote the following through
interactive planning and sufficient assessment of impact:
i. a safe, healthy, pleasant, socially functional living and working
environment which provides for the needs of various population
groups, such as children, the elderly and the handicapped;
ii.
economical community structure and land use;
iii.
protection of the beauty of the built environment and of cultural
values;
iv.
biological diversity and other natural values;
v.
environmental protection and prevention of environmental hazards;
vi.
provident use of natural resources;
vii.
functionality of communities and good building;
viii.
economical community building;
ix.
favourable business conditions;
x.
availability of services;
xi.
An appropriate traffic system and, especially, public transport and
non-motorized traffic.
Planning review
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At least once each year, local authorities must draw up a review of all
planning matters that are or will in the near future become pending in the
local authority or the regional council and which are not of minor
importance (planning review). The review briefly explains planning matters
and the stage of processing reached as well as any such decisions and
other actions which have an immediate influence on the basic premises,
objectives, content and implementation of plans.
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ii. where the land has been acquired for the erection of the
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Apportionment of compensation
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References
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3. BUILDING ECONOMICS
3.1 Architectural aspects of building economics
3.2 Rent control and other building acts
3.3 Economics of high rise buildings
building
efficiency
through
proper
space
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Tilt up
Self Compacting Concrete
Self-compacting concrete (SCC) is a relatively new product that sees the
addition of super plasticizer and a stabilizer to the concrete mix to
significantly increase the ease and rate of flow. By its very nature, SCC
does not require vibration. It achieves compaction into every part of the
mould or formwork simply by means of its own weight without any
segregation of the coarse aggregate. Developed in Japan and Continental
Europe, SCC is now being increasingly used where apart from health and
safety benefits it offers faster construction times, increased workability
and ease of flow around heavy reinforcement. Having no need for
vibrating equipment spares workers from exposure to vibration. No
vibration equipment also means quieter construction sites.
SCC is a generic term for mix designs that differ from traditional concretes
at the molecular interface between the cement compounds and the
admixture polymers. The fluidity of SCC ensures a high level of workability
and durability whilst the rapid rate of placement provides an enhanced
surface finish. SCC's high strengths overnight strengths typically reach 3040N/mm2 and 2 day strengths can break the 100N/mm2 barrier enable
easier and more reliable demoulding. SCC is certainly the way forward for
both in-situ and precast concrete construction. The health and safety
benefits and the improved construction and performance results make it a
very attractive solution.
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Tunnel Form
Tunnel form is becoming one of the most common methods of cellular
construction in the UK as its cost effectiveness, productivity and quality
benefits are being realized on a wide range of projects.
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Abstract:
Many new materials are being developed from polymers, metals, and
ceramics. Industry is beginning to introduce some of these highperformance or new-technology materials in construction and
manufacturing applications because the materials have advantages over
traditional materials like steel, concrete, wood, and aluminium. However,
many high-performance materials have not been used in large-scale
construction projects. Economic and Technical Barriers hinder industry's
aggressive introduction of these new technologies despite their
advantages over traditional materials. The primary economic barrier
preventing the use of new technology material is their high initial cost.
Regardless of how cost effective a material might be over the life cycle of
the project, industry balks at high up-front costs, particularly when the
life-cycle costs of a new material are relatively uncertain. This cost barrier
inhibits construction applications of - and eventually research in - new
materials. Yet the construction industry has many potential applications;
for example, fiber-reinforced polymers (FRPs) and high-performance
concrete and steel are technically viable substitutes for conventional
bridge materials. FRPs are also likely candidates for use in marine
structures and offshore oil rigs. Germany and Japan are leading the world
in FRP use in construction; if U.S. companies are to remain globally
competitive, they too will likely need to introduce new technology
materials in their construction projects. To overcome this cost-based
barrier to the adoption of new materials, the construction industry needs
practical economic methods for evaluating alternative building and
construction materials in a comprehensive and consistent manner.
Modern Methods of Construction
There are many ways in which the concrete industry has embraced
innovation and advocated modern methods of construction. Innovation is
an essential feature that must be present in construction; a definition of
innovation is to exploit existing and develop new technologies.
Concrete Masonry
Modern masonry construction is a tried and tested method long popular in
Britain and Western Europe and responsible for 90% of the new homes
built in the last ten years. High productivity concrete block work allows
construction times to be reduced, with gains in robustness, acoustic
performance, durability and fire resistance.
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5
2
5
Low Cost Housing is a new concept which deals with effective budgeting
and following of techniques which help in reducing the cost construction
through the use of locally available materials along with improved skills
and technology without sacrificing the strength, performance and life of
the structure. There is huge misconception that low cost housing is
suitable for only sub standard works and they are constructed by utilizing
cheap building materials of low quality. The fact is that Low cost housing is
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5
Foundation
Normally the foundation cost comes to about 10 to 15% of the total
building and usually foundation depth of 3 to 4 ft. is adopted for single or
double store building and also the concrete bed of 6(15 Cms.) is used for
the
foundation
which
could
be
avoided.
2
5
the energy of the burnt bricks in its production. By using concrete block
masonry the wall thickness can be reduced from 20 cms to 15 Cms.
Concrete block masonry saves mortar consumption, speedy construction
of wall resulting in higher output of labour, plastering can be avoided
thereby an overall saving of 10 to 25% can be achieved.
Solid cement block technology
It is an alternative method of construction of walls using soil cement
blocks in place of burnt bricks masonry. It is an energy efficient method of
construction where soil mixed with 5% and above cement and pressed in
hand operated machine and cured well and then used in the masonry. This
masonry doesnt require plastering on both sides of the wall. The overall
economy that could be achieved with the soil cement technology is about
15 to 20% compared to conventional method of construction.
Doors and windows
It is suggested not to use wood for doors and windows and in its place
concrete or steel section frames shall be used for achieving saving in cost
up to 30 to 40%.Similiarly for shutters commercially available block
boards, fibre or wooden practical boards etc., shall be used for reducing
the cost by about 25%.By adopting brick jelly work and precast
components effective ventilation could be provided to the building and
also the construction cost could be saved up to 50% over the window
components.
Lintels and chajjas
The traditional R.C.C. lintels which are costly can be replaced by brick
arches for small spans and save construction cost up to 30 to 40% over
the traditional method of construction. By adopting arches of different
shapes a good architectural pleasing appearance can be given to the
external wall surfaces of the brick masonry.
Roofing
Normally 5(12.5 cms) thick R.C.C. slabs is used for roofing of residential
buildings. By adopting rationally designed in-situ construction practices
like filler slab and precast elements the construction cost of roofing can be
reduced by about 20 to 25%.
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5
Filler
slabs
They are normal RCC slabs where bottom half (tension) concrete portions
are replaced by filler materials such as bricks, tiles, cellular concrete
blocks, etc. These filler materials are so placed as not to compromise
References
http://www.archibus.com/products/datafiles/Space.pdf
http://www.concretecentre.com/main.asp?page=148
http://www.concretecentre.com/main.asp?page=438
http://www.concretecentre.com/main.asp?page=335
http://www.concretecentre.com/main.asp?page=627
http://www.concretecentre.com/main.asp?page=609
http://www.engineeringcivil.com/low-cost-housing.html
2
5
1.
2.
3.
4.
5.
6.
7.
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5
in 1997 was based on this but failed to be notified due to resistance from
traders who are sitting tenants. Very few states have introduced the
model Act.
The new Maharashtra Rent Control Act, Delhi Rent Control Act,
Tamil Nadu Rent Control Act, Karnataka Rent Control Act all has
provisions for the dispute among the landlords and tenants. Each of the
State Rent Act provides for fixation of Standard Rent as well decree for
possession and provisions that lay down the satisfaction of the Court.
Rental Agreement is an integral part of rental law
Rent or lease of a residential or commercial property in India is subject to
strict Indian laws. A mutual agreement on the terms and conditions of the
rented property by the landlord and the tenant is required. In the present
times, leasing a commercial space in India as opposed to owning
commercial real estate is turning out to be a brilliant move.
Professional legal advice becomes a necessity as there are fewer tenantfriendly laws in the area of commercial leases, and no standard lease
agreements. A lawyers help will be useful for making an informed
decision in negotiating the best deal on a commercial lease as he/she can
research zoning laws and local ordinances and inform you about local real
estate market conditions and customs.
A rental agreement refers to a relationship between the landlord and
the tenant. It is legally binding upon the parties. It may be brief, or it may
have extra conditions or obligations. However, any changes or additions
to a rental agreement should be maintained in writing. The rental
agreement is a Legal Form which has to be completed, signed and dated
by the tenant and landlord. There are leases and rental forms for renting,
leasing and managing residential rental properties. Both the parties must
have access to the document once it is signed.
The landlord should get the agreement registered. The landlord must give
the tenant a duplicate copy of the rental agreement, failing which the
tenant is not obligated to pay rent until the tenant receives a copy of the
rental agreement.
For a lease agreement, the terms of the lessee (tenant) and the lessor
(landlord) when they enter into a lease agreement would include terms
like the term of lease, deposit amount and monthly rentals. The lessor or
the landlord should ensure the premises come back in the right shape in
repossession.
There has been no damage to the tiling, plumbing, flooring or
electrification and the premises are in the proper condition.
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5
All the electricity and telephone charges have been taken care of till
the specified date by the lessee or tenant at the time of
repossession.
On satisfactory fulfilment of all these aspects, the lesser should offer the
refund the security deposit (if given) to the lessee offering vacant and
peaceful possession of the premises.
In a Tenancy Agreement there is a transfer of interest and it establishes
the non-eviction of the tenant by the owner except on the grounds of
eviction
mentioned
under
the
Rent
Act.
Under the Leave and License Agreement transfer of interest takes place
on permission and the same can be terminated as per the terms of the
agreement. The possession can be demanded back from the licensee. The
label to the agreement could be Leave & License or Tenancy Agreement,
but it is the intention of the party that counts. Documentation of the
commercial lease is also an important rental law procedure.
Conclusion
The rental laws in India need to be revised to protect the owner and
his/her property from the tenant.
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5
If these laws are enacted and strictly enforced, there is every chance that
more investors will want to enter the real estate market to utilize the
rental fees as income. This is especially true for the commercial sector.
The tax laws also need to be revised so that renting of properties becomes
a financially viable option. Amendments in the Rent Acts of several states
are a progressive move.
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Nothing contained in any law or enactment for the time being in force to
regulate the erection, re-erection, construction, alteration or maintenance
of buildings within the limits of any municipality shall apply to any building
used or required for the public service or for any public purpose, which is
the property, or in the occupation, of the Government, or which is to be
erected on land which is the property, or in the occupation, of the
Government: provided that, where the erection, re-erection, construction
or material structural alteration of any such building as aforesaid (not
being a building connected with [1] defence, or a building the plan or
construction of which ought, in the opinion of [2]the Government
concerned], to be treated as confidential or secret) is contemplated,
reasonable notice of the proposed work shall be given to the municipal
authority before it is commenced.
References:
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5
1. www.indianground.com/rentals/rental-laws-in-india.aspx
2. http://www.vakilno1.com/bareacts/Laws/The-Government-BuildingsAct-1899.htm
2
5
High-rise buildings became possible with the invention of the elevator (lift)
and cheaper, more abundant building materials. Buildings between
75 feet (23 m) and 491 feet (150 m) high are, by some standards,
considered high-rises. Buildings taller than 492 feet (150 m) are classified
as skyscrapers. The average height of a level is around 13 feet (4 m) high,
thus a 79 foot (24 m) tall building would comprise 6 floors.
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5
Service Core
A service core is those parts of a building consisting of the lift shafts, lift
lobbies, staircases, toilets, mechanical and electrical systems, riser-ducts
and plant rooms. The design of a service core can significantly affect the
overall space efficiency of the building, vertical circulation system and
distribution routes of mechanical and electrical system. In many tall
buildings the core structure also acts, either in isolation or in conjunction
with the perimeter frame, as the principal load bearing element for both
the gravity and wind loadings.
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5
Conclusion
The two main considerations other than economic value are the clients
preference and the statutory requirements on tall buildings. The cost
effect of high-rise buildings concerns the quality and the quantity change
of different building elements. This calls for a sensible choice of the
systems or the type of materials used for a say, a 10-storey building, 20storey building, a 30-storey building and so on, up to a height or number
of storey permitted by the statutory requirements. This study presents a
cost data analysis of
the building elements in respect of the number of storey and height of
seven office buildings which provide an indication of the cost trend and
the cost change for a change of the numbers of storeys and heights.
SECTION B: SOCIOLOGY
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5
things
made
by
both
nature
and
man.
Types of environment
(i) The Physical Environment - The physical environment refers to the
geographical areas or territory which man occupies. This consists of dry
lands, forests and grasslands, lakes and deserts. Man's physical
environment, to a large extent determines the type of occupation those
living in it are likely to engage in.
(ii) The Social Environment - Since no man is an island, man lives
together as a group or society. This group or society is referred to as
'Man's Social Environment'. Man's real social environment is men. It is the
social environment that conditions human development or behaviour.
Things that mould social behaviour include ideas, beliefs, notions, biases,
presuppositions, etc. The most important part of the overall environment
of man is the social environment. It differs from one nation to another, one
period to another, one class to another, and its influences are outside the
control of any one individual. The social system needs to be remodelled
such that individual success does not conflict with communal welfare. This
can be achieved by encouraging such social traits as altruism, readiness
to cooperate, sympathetic enthusiasm, and so forth, instead of putting a
premium on many anti-social traits such as egoism, cunning, and
insensitivity to human misery.
All in all, differences among mankind are the outcome of nature and
nurture, of heredity and environment. Some are sharp, some are dull.
Nevertheless many apparently dull persons can be restored to normal
intelligence by proper education, regular exercise of the mind, and
facilities for wholesome association. The way to progress lies in a
ceaseless effort to develop our knowledge and intelligence. Such
development is possible only when the mind is kept steady and wellpoised.
How man influences his physical environment:
Man has continued to change his physical environment in order to
improve his living conditions. He has been able to develop and turn many
of the natural conditions to his own advantages, such as in the following
example:
ii.
iii.
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5
i.
iv.
v.
ii.
iii.
2
5
i.
iv.
Man makes music for leisure and happiness. 'All work no play makes
Jack a dull boy'. Therefore, in order to ease-off stress after the day's
work, man engages himself in music production or other avenues of
creating
humour
or
entertainment.
In addition, man in a bid to live exemplary life, founds religion and
religious beliefs. For instance, the Christians worship the supreme
God.
They make effort to obey the commandments of God in other to
inherit His Kingdom. The Moslems practice the Islamic religion
which was founded by Prophet Mohammed. They worship Prophet
Mohammed and observe his commandments. Consequently, the
traditional religion was founded by our forefathers. Those who
practice it make graven images, worship it and observe its rules and
regulations,
etc.
ii.
iii.
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5
i.
The ways in which people within a culture are organized into smaller
groups; each smaller group has its own particular tasks. [2]
Karl Marx argued that the economic base substantially determined the
cultural and political superstructure of a society.
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5
2
5
can
also
be
divided
into
microstructure
and
2
5
2
5
A social group consists of two or more people who interact with one
another and who recognize themselves as a distinct social unit. The
definition is simple enough, but it has significant implications. Frequent
interaction leads people to share values and beliefs. This similarity and
the interaction cause them to identify with one another. Identification and
attachment, in turn, stimulate more frequent and intense interaction. Each
group maintains solidarity with all to other groups and other types of
social systems.
Groups are among the most stable and enduring of social units. They are
important both to their members and to the society at large. Through
encouraging regular and predictable behaviour, groups form the
foundation upon which society rests. Thus, a family, a village, a political
party a trade union is all social groups. These, it should be noted are
different from social classes, status groups or crowds, which not only lack
structure but whose members are less aware or even unaware of the
existence of the group. These have been called quasi-groups or groupings.
Nevertheless, the distinction between social groups and quasi-groups is
fluid and variable since quasi-groups very often give rise to social groups,
as for example, social classes give rise to political parties.
Types of groups:
Primary groups are small groups with intimate, kin-based relationships:
families, for example. They commonly last for years. They are small and
display face to face interaction.
Secondary groups, in contrast to primary groups, are large groups
whose relationships are formal and institutional. They may last for years
or may disband after a short time. The formation of primary groups
happens within secondary groups.
Individuals almost universally have a bond toward what are known as
reference groups. These are groups to which the individual conceptually
relates him/her, and from which he/she adopts goals and values as a part
of his/her self identity.
Other types of groups include the following:
Household - all individuals who live in the same home, there are
various models in Anglophone culture including the family, blended
families, share housing, and group homes.
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5
Mob - A mob is usually a group of people that has taken the law into
their own hands. Mobs are usually a group which gather temporarily
for a particular reason.
Group - 3 to 5 people
Bunch - 6 to 9 people
Significance:
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5
2
5
Two or more people in interacting situations will over time develop stable
territorial relationships. As described above, these may or may not
develop into groups. But stable groups can also break up in to several sets
of territorial relationships. There are numerous reasons for stable groups
to malfunction or to disperse, but essentially this is because of loss of
compliance with one or more elements of the definition of group. The two
most common causes of a malfunctioning group are the addition of too
many individuals, and the failure of the leader to enforce a common
purpose, though malfunctions may occur due to a failure of any of the
other elements (i.e., confusions status or of norms).
References
2
5
1. wikipedia.org/wiki/Social_structure
2. www.britannica.com/EBchecked/topic/629641/violence
3. www.nigeriansinamerica.com/articles/3659/2/Mans-Family-And-HisEnvironment---An-Essay-On-The-Issues-Of- The-Society/Page2.html
4. wikipedia.org/wiki/Social structure
5. wikipedia.org/wiki/index.html?curid=325726
6. wikipedia.org/wiki/Social group
7. nos.org/331courseE/L-22%20SOCIETY%20AND
%20ENVIRONMENT.pdf
SECTION B: SOCIOLOGY
5. URBANISATION
5.1 Trends and characteristics
5.2 Dynamics
development
of
urban
growth
expansion
and
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5
5.4 Study
an
entity
is
being
(re-)organized
2
5
A unique feature of dyads is that each individual in the dyad has total veto
power over any aspect of the relationship (Appelbaum and Chambliss,
1997:84).
Groups
A. General Characteristics of Groups
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5
A group is at least one person larger than a dyad. It has three or more
people. Groups are different from dyads in that they depend less on the
individual actor for continuity.
2. Increases in Size Equals Loss of Freedom
As the group grows in numbers, the individual freedom of any particular
member is de-emphasized. Furthermore, as the group grows in size, more
emphasis is put on the well-being of the group.
3. Interaction Reaffirms Social Patterns
Groups depend on interaction to affirm and reaffirm social patterns. The
strength of patterns in the group depends on the history of the interaction.
Usually, the longer the group exists, the stronger the bonds become.
4. Groups Contribute to Larger Organization
Social organization at the "formal level" is sufficiently large that
continuous interaction among all actors is impossible. Even in large
organizations interaction between individuals still occurs in small groups.
The interaction of small groups within the frame work of larger
organizations reaffirms the social patterns of the larger social
organizations.
5. Groups Define Reality for the Individual
The group's definition of reality is a pattern that the individual assumes.
The individual forms expectations about the world through group
involvement. One learns within the group what the important issues are
and the guide lines (the rules) that the group expects you to live by.
Formal Organizations
Formal organizations include churches, clubs, schools, armies, colleges,
the IRS, and hospitals.
A. Characteristics of Formal Organizations
Characteristics of formal organizations include:
1. Impersonal interaction among group members.
2. As groups grow in size, they make objectives explicit in writing
(e.g., they become more formal).
3. Formal organizations are created to work toward specified
goals. When they meet goals, the individual moves on.
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5
2
5
A bureaucracy traditionally does not create policy but, rather, enacts it.
Law, policy, and regulation normally originate from a leadership, which
creates the bureaucracy to put them into practice. In reality, the
interpretation and execution of policy, etc. can lead to informal influence.
A bureaucracy is directly responsible to the leadership that creates it,
such as a government executive or board of directors. Conversely, the
leadership is usually responsible to an electorate, shareholders,
membership or whoever is intended to benefit. As a matter of practicality,
the bureaucracy is where the individual will interface with an organization
such as a government etc., rather than directly with its leadership.
Generally, larger organizations result in a greater distancing of the
individual from the leadership, which can be consequential or intentional
by design.
Pyramids or hierarchies
Committees or juries
Matrix organizations
Ecologies
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5
Pyramids or hierarchies
A hierarchy exemplifies an arrangement with a leader who leads leaders.
This arrangement is often associated with bureaucracy. Hierarchies were
satirized in The Peter Principle (1969), a book that introduced
hierarchiology and the saying that "in a hierarchy every employee tends
to rise to his level of incompetence".
Committees or juries
These consist of a group of peers who decide as a group, perhaps by
voting. The difference between a jury and a committee is that the
members of the committee are usually assigned to perform or lead further
actions after the group comes to a decision, whereas members of a jury
come to a decision. In common law countries legal juries render decisions
of guilt, liability and quantify damages; juries are also used in athletic
contests, book awards and similar activities. Sometimes a selection
committee functions like a jury. In the middle Ages juries in continental
Europe were used to determine the law according to consensus amongst
local notables.
Committees are often the most reliable way to make decisions.
Condorcet's jury theorem proved that if the average member votes better
than a roll of dice, then adding more members increases the number of
majorities that can come to a correct vote (however correctness is
defined). The problem is that if the average member is worse than a roll of
dice, the committee's decisions grow worse, not better: Staffing is crucial.
Matrix organization
This organizational type assigns each worker two bosses in two different
hierarchies. One hierarchy is "functional" and assures that each type of
expert in the organization is well-trained, and measured by a boss who is
super-expert in the same field. The other direction is "executive" and tries
to get projects completed using the experts.
Ecologies
This organization has intense competition. Bad parts of the organization
starve. Good ones get more work. Everybody is paid for what they actually
do, and runs a tiny business that has to show a profit, or they are fired.
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5
Organizational Trends
There are five key organizational trends that you should be aware of.
Globalization
Increasingly globalized sales, manufacturing, research, management
Movement from direct exports to having sales offices in different
countries to having manufacturing to all functions spread across the
globe
Due to:
o
of
international
Diversity
Workforce getting more heterogeneous sexually, racially, culturally,
individually, etc.
Source of both innovation and conflict/communication problems
Due to:
o
changing demographics
Flexible
Organizational systems and processes and people that can respond
differently to different situations
Fewer detailed rules and procedures
Greater autonomy, encouragement for initiative
Due to:
telecommuting,
job
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5
Flat
Due to:
o
Networked
Direct communication across unit & firm boundaries, ignoring chain
of command
Cross-unit team structures
Across the board contact with customers, not just official boundary
spanners
Customization
Decentralization
Due to:
o
[2]
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5
Characteristics of organization
Main characteristics of formal organization
labor
and
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5
Membership
involvement
is
spontaneous
and
with
varying
degrees
of
[5]
Reference
1.
2.
3.
4.
5.
6.
http://www.en.wikipedia.org/wiki/sociology
http://www.en.wikipedia.org/wiki/organizational behaviour
http://www.en.wikipedia.org/wiki/organisation
http://www.en.wikipedia.org/wiki/formal organization
http://www.en.wikipedia.org/wiki/informal organization
http://www.delmar.edu/socsci/rlong/intro/org.htm
2
5
2
5
The study of urban dynamics requires tools that allow the exploration of
the
Change phenomenon in time and space. Urban modelling techniques have
been traditionally used to explore issues in urban dynamics, and automata
2
5
2
5
2
5
2
5
2
5
2
5
2
5
Conclusion
While demographic data still shows a world population growth one can see
that unbalanced trends are destroying human cohesion and building social
exclusion in cities and regions. MAIN ISSUES STRONG MIGRATION
FLOWS; INCREASE OF DEMAND ON METROPOLITAN AREAS
Another side of the problem is the permanent increase of demand of
nutrients and other resources while most of them are locally becoming
less and less. OTHER ISSUE CONGESTION OF MARKETS, UNEVEN
DISTRIBUTION OF OFFER AND DEMAND, HOMELESS PEOPLE
A third problem lies on technology development with large impacts on
environment, employment, on economy and on social aspects, bringing
UNBALANCED EFFECTS on them, very difficult to deal with.
A fourth question lies on the rapid changes of mentalities and beliefs,
through globalization and the world-wide spread of information, where
most PEOPLE IS LOOSING A SCHEME
OF HUMAN VALUES, getting confused and becoming an easy target for
marginalization, drug addict, crime or suicide!
As a result there is a rapid growth of panic in big cities and metropolitan
areas, destroying their character of a space of an integrated social
relationand bringing instead the walled condominiums and street crime.
ISSUES: SOCIAL CONFLICTS AND CRIME, ATMOSPHERE OF FEAR. [2]
Reference
1. Anatolian Journal of Psychiatry 2008; 9:238-243
a. TOPIC: Impacts of urbanization process on mental health
b. M. Tayfun TURAN, Asl BESIRLI
2. Manuel da Costa Lobo, Problems and solutions of environment and
urbanization in the World,
a. 44th ISOCARP Congress 2008
b. TOPIC: PROBLEMS AND SOLUTIONS OF ENVIROMENT AND
c. URBANIZATION IN THE WORLD
d. HEADING: I THE PROBLEMS OF TODAY.
5.4 STUDY
CHINA GREEN BUILDINGS
http://chinagreenbuildings.blogspot.com
Green Building Economics 101
As promised, todays post will describe the economics of green building
and why green buildings are so much more valuable than their brown
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5
2
5
2
5
have a long payback period. Since many developers usually have a limit
on their desired payback period, say 5 years, they often will not make
investments that have longer investments.
While it may be true that some green building systems have long payback
periods, this totally misses the point in my mind. Simple payback period
makes no sense as a rigorous valuation tool for several reasons. First and
most importantly, payback period has no concept of revenues. For
example, imagine an investment that required $1 today, and then made
no revenues for the first 5 years, but made $1,000,000 in the 6th year. If a
developer were to strictly use the simple payback period with a 5 year
limit, they would miss this clearly profitable investment. This may be an
extreme example, but captures a serious flaw in the simple payback
period method of valuation. For this reason, I do not consider the simple
payback method to be a useful method of valuation. While it generally is
true that investments with short paybacks have good returns, it is not
necessarily true that investments with longer payback periods do not
have
good
returns.
Therefore I will ignore simple payback entirely and focus instead on direct
capitalization
today.
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5
issues remain the same. Please email me or use the comments box for
any questions that relate to different lease structures and I will be happy
to respond.)
Reduced costs
The first way green buildings increase building value is through lower
operating
costs.
Obviously, a green building that uses less energy will have lower utility
bills. Since LEED rated buildings on average use 33% less energy than
regular buildings, this means utility costs are about 33% lower. Since
utilities account for ~25 to 30% of an office buildings operating expenses,
this adds up to big value. Smaller water and waste bills also make for
better economics.
Green buildings can also lower other less-obvious expenses. For example,
the Firemans Fund, a leading insurance company, offers lower insurance
rates for LEED certified buildings. Other possible cost saving measures for
green buildings include lower interest rates through green banks
(although again this doesnt affect NOI, only returns to the owner) and
lower
maintenance
costs
thanks
to
smaller
systems
commissioning
and
better
processes.
The result is less operating expenses for green real estate, which means
higher
building
value.
Increased revenues
Green buildings also benefit from higher revenue, primarily through
increased
rents.
Several recent surveys and studies show that green buildings command
higher rents. A study by economists for the Berkeley Program on Housing
and Urban Policy showed that green buildings on average rent for 2-6%
more than their non-green counterparts, after controlling for other
variables like location and building age. This green premium even exists in
China, where a recent JLL report shows that nearly 70% of high-end real
2
5
estate tenants are willing to pay more for green real estate.
for
green
buildings.
therefore
should
receive
lower
cap
rates.
Lets first look at expected growth of NOI. As more and more companies
demand green real estate and are willing to pay more for the productivity
benefits, I think its safe to say that we can expect rents and NOI at green
buildings to grow faster than those at brown buildings. Or conversely,
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5
when green building becomes the norm, very few tenants will be willing to
pay the same price for brown real estate, meaning negative rent growth
for many brown properties. The result is still faster NOI growth for green
buildings, and therefore lower cap rates.
Green buildings are also less risky than their brown counterparts. Since
green buildings use more advanced building techniques and are more
likely to satisfy the needs of tomorrows tenants, there is less risk of
functional obsolescence for green buildings. Moreover, thanks to lower
environmental impact, green buildings also face less regulatory risk. The
result? Again, lower cap rates for green buildings.
Green buildings have higher value
So lets take these results and run through a quick thought experiment.
Lets start with a hypothetical building with rent of $1,500,000, expenses
of $500,000 and a cap rate of 10%. Now what happens when we take the
same building but assume its green? Well now rents will be 2-6% higher,
utilities will be 33% lower, and I'll assume the cap rate will be lower by 0.5
- 1%. As we can see from my calculations below, we get a big value
increase.
At the low end, we should expect green buildings to be worth 12% more,
and at the high end, green buildings could be worth as much as 25% more
than their brown counterparts. Of course this is just a hypothetical
example, but the takeaway is clear nonetheless: green buildings are more
valuable.
What does this mean for developers and owners?
For developers, I think this means build green from the start. Even for
developers who build to sell immediately upon completion, green building
is still compelling. The purchaser of the building will have an interest in
owning for the longer-term, and should be willing to pay more for green.
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that I laid out above, it seems they can easily get 5+% for all of the
reasons I described. This means as long as that developers can hold the
cost premium for green below this 5%, they will be making more money
than they otherwise would by building brown. If a developer can build
green at 5% but get a 10+% valuation increases, well, now the developer
is
really
doing
well
financially
(not
to
mention
socially
and
eventually
become
the
only
way
to
build.
For owners, I think this means retrofitting to green standards right now. As
my hypothetical calculations showed, the benefits of retrofitting and
getting green certification are huge. Not only will the building benefit from
higher rent, lower operating costs, better corporate image, less risk, etc
etc, but it will most likely pay for itself through immediately increased
building value. For example, if a building owner could perform a large
retrofit on a building for 10% of the building value, the investment would
immediately pay for itself thanks to higher post-retrofit building value.
Although increased building value isnt exactly the same as cash in hand
for the building owner, the increased building value provides significant
security for this investment in energy efficiency and green features.
The bottom line is that green building makes sense for the bottom line. As
more and more developers, owners and tenants realize this, I expect to
see green building become the norm for those who can afford to pay for
the green benefits, particularly those in Class A office buildings, luxury
apartments and international quality industrial facilities. The trick then will
be to figure out how to make green building economics translate into
something that works for those other sectors of the market that Ive been
talking about so much recently. Stay tuned for my next post for some
initial ideas on how to use these green building economics to make green
building affordable- and widespread.
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Bank supervisors need to lay down tougher rules and apply them more
strictly
Although it will take some time to fully understand the causes of the
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addition, there is evidence that the banks remain oversized for the
Icelandic markets, thus weakening their profitability. The banks should be
streamlined to make them profitable, including by merger if necessary
(provided that this does not undermine competition in banking services).
All of these measures would help to prepare the banks for full privatisation
within the next few years. To facilitate privatisation, foreign direct
investment into the Icelandic banking system should be encouraged. Other
small countries, such as New Zealand, have found that having a banking
system that consists almost entirely of well run fully-owned subsidiaries of
foreign banks works well and has been particularly advantageous during
this period of global financial turmoil.
A start to removing capital controls should be made as soon as feasible
Iceland has imposed capital controls to prevent disorderly outflows from
causing a fall in the external value of the krna, especially outflows of non
resident investors large holdings of krna-denominated securities, which
would have driven many un-hedged firms and some households into
bankruptcy. As well, by disallowing investments abroad, the capital
controls in effect forced domestic creditors to lend to domestic borrowers,
thus sharply reducing the risk premium and lowering market interest rates.
Nonetheless, lifting capital controls should start as soon as this can be
done safely, to normalize relations with foreign markets and allow firms to
tap financial sources abroad. The authorities plan to lift the capital controls
gradually once a medium-term fiscal consolidation plan is well in train, the
banking sector has been put back on its feet and there are sufficient
international reserves. According to available information, some 20% of
household debt was denominated in foreign currency in September 2008
and was not hedged while 50% of corporate borrowers with foreigncurrency denominated debt do not have foreign currency earnings.
Macroeconomic policy faces challenging times
Monetary and fiscal policy challenges have grown hugely. Formulating an
exit strategy from the temporary regime of capital controls and high
interest rates is a major task. The lack of satisfactory monetary policy
outcomes under different regimes in past years points to the limitations of
an independent monetary policy in a very small, open country like Iceland,
particularly in the context of large capital inflows associated with global
carry trade transactions. Moreover, the crisis has imposed a very high
budgetary cost. The large fiscal deficits need to be reduced and eventually
eliminated and the rising national debt will need to be turned around.
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Volatility of inflation(1)
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Euro area entry is, however, some time off, even under the most optimistic
circumstances. For the time being, monetary policy should remain geared
towards supporting the krna and protecting the balance sheets of
unhedged borrowers. Exchange rate stability is the main goal of the capital
controls, but since capital controls do not work perfectly, monetary policy
needs to maintain a relatively strict stance. Until concerns about
disorderly capital outflows diminish, monetary policy should stay focussed
on maintaining exchange rate stability, which may limit the scope for
further reductions in the interest rate. Once the capital account has been
liberalised, a managed exchange rate regime will be increasingly difficult
to implement. The authorities should thus adopt an inflation-targeting
framework geared to meeting the Maastricht Treaty inflation criteria,
which would imply switching from the official CPI to the internationallycomparable harmonised CPI (HICP). To improve the functioning of the
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While macroeconomic policy currently runs high on the policy agenda, this
should not obviate the need to conduct growth-friendly structural reforms,
notably in the labour market and the product market. The labour market is
flexible overall with high participation rates, ease of entry for migrants,
strong work incentives and unemployment benefits of short duration by
international standards. With Iceland being confronted for the first time in
recent history with a massive increase in unemployment, it will be
important to avoid introducing policies that would undermine the good
functioning of the labour market, such as higher replacement rates and
longer duration for unemployment benefits, as this would contribute to a
rise in long-term unemployment. Another strength of the Icelandic labour
market is that real wages are highly flexible, thus helping to smooth
economic adjustment in the face of shocks. Real wage cuts have in the
past come in the form of consumer price inflation exceeding the growth of
nominal wages. If Iceland joins the euro area, nominal wage flexibility will
become more important as a mechanism for adjusting to asymmetric
shocks. Although the product markets generally function well, several
areas need attention, as indicated in past OECD Surveys. The energy
sector is dominated by the state-owned National Power Company and
should be opened to foreign investment. In the mortgage market,
although the Housing Finance Fund is currently an element of stability,
policy makers might have to reassess its role as it benefits from a
government guarantee that prevents fair competition and distorts the
allocation of resources. More generally, experience of euro-area countries
underlines the need for greater flexibility throughout the economy if
adjustments to shocks are to occur smoothly and contribute to sustainable
growth and high living standards.
STABILISATION
AND
www.oecd.org,www.worldbank.org
The following OECD assessment and recommendations summarise
chapter 1 of the Economic Survey of Russia published on 15 July 2009.
Contents
Between the financial crisis which struck Russia in August 1998 and the
global crisis which broke out in earnest in September 2008, Russia had the
strongest decade of growth in its history, with real GDP nearly doubling.
This strong increase in output, coupled with the vigorous real appreciation
of the rouble, driven mainly by the surge in energy and raw material
prices, meant that nominal GDP measured in US dollars rose almost 7-fold
during that period, more than in any other major country. A wide range of
other economic and social indicators also saw dramatic improvements
during those ten years. Total factor productivity grew strongly, real wages
soared, and unemployment and poverty rates fell sharply. Strong current
account surpluses, combined with a swing in the private capital account
from large net outflows to even larger net inflows, pushed international
reserves to nearly USD 600 billion, behind only China and Japan. The
transformation of the government finances was particularly marked. After
defaulting on part of its debt in 1998, the federal government ran a string
of surpluses and almost extinguished public debt while building up foreign
assets amounting to 13% of GDP by end-2008. The picture for inflation was
more mixed, but for most of the past decade inflation was on a trend
decline, falling from 85% in late-1998 to single digits by mid-2007. At that
time, a combination of surging international food and energy prices and
very rapid money supply growth in Russia pushed inflation back up to
15%, before it began to fall again in late-2008 as energy and commodity
prices collapsed and money supply growth came to a sudden halt.
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The strategy for Russia in tackling such a big economic crisis needs to be
broad-based, including a range of fiscal and monetary policy measures to
support aggregate demand and maintain the functioning of the banking
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the onset of the crisis meant sharply falling reserves, and this was
accompanied by a large fall in M2 since September 2008. Real interest
rates are becoming positive for the first time in years just as aggregate
demand is collapsing due to adverse external shocks. In addition, the
resistance to depreciation delayed a compensatory stimulus for non-oil
tradable when the oil price fell. The stepwise widening of the exchange
rate band allowed some breathing space for firms with heavy foreign
currency liabilities and possibly prevented a sharper weakening of
confidence in the rouble and, thus, a run on deposits. But the costs were
heavy, as expectations of further depreciation encouraged capital flight.
The central banks communication policy should foster the recognition that
the real exchange rate eventually has to move in line with large swings in
fundamentals such as oil prices. This episode revealed the weakness in the
monetary policy framework and illustrated that holding to a fixed
exchange rate or managing a float for an extended period is difficult, as
serious conflicts with fundamentals are likely to arise sooner or later,
particularly in a commodity-dependent economy.
The main short-term challenge for fiscal policy is to maximise the fiscal
multiplier while managing moral hazard and risks to long-term fiscal
sustainability. The former tends to suggest expenditure measures, possibly
in the form of transfers to low-income households or lower levels of
government, rather than general tax cuts. Temporary measures, such as
one-off transfers or temporary tax rebates, can be one effective way of
maximising the short-term demand impact. Measures those are hard to
reverse, such as raising entitlements or cutting tax rates, could undermine
long-term sustainability. The current crisis is increasingly looking like a
more extended downturn than originally foreseen, which may make
infrastructure spending more attractive than otherwise, particularly since
there is evidence that the fiscal multiplier is highest for such spending. The
threat to fiscal sustainability would appear to be less of a problem in
Russia than in many OECD countries, given low levels of gross public debt
and substantial public financial assets. Nonetheless, the federal deficit will
be very large in 2009, and is likely to remain at high levels for several
years. Moreover, Russia faces underlying negative demographic trends
and particularly serious environmental degradation problems, which could
entail major fiscal costs in the future. As in other countries, therefore, it
will be important for Russia to set its stimulus efforts in a medium-term
context that credibly charts a return to a sustainable public debt path.
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Looking beyond the crisis, how can a better growth model be put in place?
At some point the crisis will end, and oil prices will probably recover sooner
rather than later. In the medium term, Russia will face the challenge of
putting in place a healthier model for sustained catch-up growth. This
should be one based on innovation, investment, the accumulation of
human capital and coherent implementation of the rule of law within a well
regulated and competition-enhancing market economy, rather than one
largely driven by strong but temporary improvements in the terms of trade
Source: Federal Service for State Statistics, Central Bank of Russia and
Ministry of Finance of the Russian Federation.
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The authorities reaction to the onset of the crisis was broadly in line with
that of many OECD economies, although the response in Russia was
unusually rapid and large, reflecting in part the substantial resources
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Russia has made major improvements to the structure of its taxation and
to tax collection. Tax bases have been broadened, rates cut, and
compliance improved. Nonetheless, scope remains for further reform that
could speed up convergence to advanced country income levels. Oil and
gas taxation should be adjusted to capture economic rents without
harming incentives for exploration and development. In particular, export
taxes on crude oil and oil products should be removed in the medium
term. The government should address problems with VAT refunds directly,
rather than bow to demands to cut rates, given that VAT is a relatively
efficient tax. Russia has scope to increase the revenue share of property
taxes, which OECD research suggests is the least growth-unfriendly form
of taxation. Corporate profit tax, which is found to be particularly harmful
for growth performance, is already at low levels after the most recent cut
to 20% but, subject to satisfactory overall revenue collection, further
reductions should not be ruled out. Economic efficiency would also
suggest exploring ways of reducing the comparatively high tax wedge,
which again is relatively growth-unfriendly. Apart from the possibility to
further improve economic efficiency, considerable scope also remains to
alleviate poverty, which despite some progress during the recent episode
with exceptionally high growth is still far more prevalent than in OECD
countries. This may require more redistribution than can be achieved at
the moment with a flat tax rate for personal income, a regressive unified
social tax and relatively low real estate and wealth taxation. This issue will
be dealt with in the forthcoming OECD Labour Market and Social Policy
Review.
The following OECD assessment and recommendations summarise
chapter 3 of the Economic Survey of Russia published on 15
July 2009.
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Contents
Just as monetary conditions during the period of strengthening oil prices
were too easy, as balance of payments strength fed through to money
supply growth via the central banks exchange rate-oriented monetary
policy, so they risk becoming too tight in a context of falling oil prices and
capital outflows. Intervention to support the rouble in the months
following the onset of the crisis meant sharply falling reserves, and this
was accompanied by a large fall in M2 since September 2008. Real
interest rates are becoming positive for the first time in years just as
aggregate demand is collapsing due to adverse external shocks. In
addition, the resistance to depreciation delayed a compensatory stimulus
for non-oil tradable when the oil price fell. The stepwise widening of the
exchange rate band allowed some breathing space for firms with heavy
foreign currency liabilities and possibly prevented a sharper weakening of
confidence in the rouble and, thus, a run on deposits. But the costs were
heavy, as expectations of further depreciation encouraged capital flight.
The central banks communication policy should foster the recognition
that the real exchange rate eventually has to move in line with large
swings in fundamentals such as oil prices. This episode revealed the
weakness in the monetary policy framework and illustrated that holding to
a fixed exchange rate or managing a float for an extended period is
difficult, as serious conflicts with fundamentals are likely to arise sooner or
later, particularly in a commodity-dependent economy.
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The central banks welcome intention to shift over time to an inflationtargeting regime would address the tensions which have beset monetary
policy in recent years. Inflation targeting has proved a successful
framework for a wide range of countries, including those with a high
degree of commodity dependence. Also, it has often worked well even
when some factors, advanced as pre-conditions for making the transition
to inflation targeting, have not been fulfilled. Nonetheless, there is a good
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Contents
The authorities reaction to the onset of the crisis was broadly in line with
that of many OECD economies, although the response in Russia was
unusually rapid and large, reflecting in part the substantial resources
available to the authorities after years of fiscal and balance of payments
surpluses. Liquidity and capital were provided to the banking system,
deposit insurance limits were increased, and a number of expansionary
fiscal measures were announced. All told, quantifiable announcements in
the first months of the crisis were equivalent to about 13% of GDP. These
measures were initially thought to be more than adequate to address the
consequences for Russia of the global financial crisis, but it has become
increasingly clear that Russia is facing a deeper and longer downturn than
was imagined a few months ago. As the stock of available resources has
dwindled while the cost of some initial measures has risen (notably the
combination of limiting depreciation of the rouble while providing ample
liquidity to banks) new measures are being more carefully weighed,
especially with respect to possible risks to fiscal sustainability.
Demand-support measures will be less effective to the extent that the
financial system is not operating smoothly. This implies that maintaining
the functioning of the banking system is of prime importance. While
liquidity shortages did trigger turmoil at the onset of the global crisis, the
main threat to credit growth now appears to be solvency problems, arising
from the declining capacity of borrowers to repay bank loans. Banks risk
breaching regulatory capital requirements if, as expected, the downturn
brings an upsurge in non-performing loans. Such capital shortages can
force deleveraging as banks shrink their balance sheets to meet capital
adequacy requirements. Banks may also be unwilling to lend as credit
risks on new lending rise in an environment of negative real GDP growth
both domestically and abroad. The challenge is to maintain capital
adequacy and prevent a sharp curtailing of lending flows financing new
activities, while minimising moral hazard and the cost to taxpayers.
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Russias banking sector has suffered repeated crises since the start of
transition. Policy makers face two broad regulatory challenges in seeking
to improve the stability of the banking system: to converge on existing
best practice as regards the implementation of prudential supervision and
(a challenge shared with many other countries) to address defects in bank
regulation which amplify economic cycles and give insufficient weight to
liquidity considerations. In the cyclical upswing Russian banks on average
maintained but did not increase capital cushions above the minimum
standard, and many therefore risk falling below the minimum as loan
losses rise as a result of the recession, unless new capital can be found.
As in OECD countries, there is a need for a more macro-prudential
approach to financial supervision, which takes more account of systemic
risks, in addition to focusing on bank-specific ones. Capital requirements
and/or provisioning rules should be made counter-cyclical and capital
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There are still many banks, most of which are very small
End of period
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Reflecting the legacy of the Soviet era as well as the backlash after the
chaotic early years of transition to a new system, state control in the
Russian economy is extensive, via both direct state ownership and control
over economic activity. State-owned enterprises are found across a wide
range of sectors and often occupy a dominant position in their industry.
Furthermore, there is a pervasive blurring of the line between the public
and private sectors, arising not only from the extensive role of stateowned enterprises but also by close ties between government (at all
levels) and major private firms. One reflection of this phenomenon is the
unusually important role of current or former politicians and senior
bureaucrats in business, which gives rise to multiple, distorting and costly
conflicts of interest. Recent initiatives to strengthen the obligations for
politicians and senior bureaucrats to publicise their incomes and financial
assets are welcome. The special-status state corporations, most of which
were established recently, are exempt from some reporting and
monitoring obligations. These exemptions should be removed.
Furthermore, the extent of the problems posed by the unclear governance
of these institutions, which are neither under full political surveillance nor
privately owned, should be carefully monitored. The PMR indicators also
signal a high level of government involvement in the private business
sector. In part, this reflects a prevalence of command-and-control-type
regulation. Significant benefits in terms of economic performance could be
yielded by reducing political interference in the operation of state-owned
enterprises (SOEs) and private sector firms. This should include separating
the activities with non-commercial policy objectives of SOEs and
consolidating them to the relevant government department; improving
standards of transparency and disclosure in SOEs; imposing an effective
firewall between public and private professional activities to avoid
conflicts of interest; disposing of golden shares in SOEs and private firms;
increasing the independence and accountability of government
representatives and accelerating appointments of independent and
accountable directors on SOE Boards; revitalising privatisation (once SOE
corporate governance has been improved); reducing the list of strategic
firms and sectors; and using regulatory alternatives to command-andcontrol regulation and direct intervention.
State control stands out as accounting for the high overall score
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Russias average import tariff rate is somewhat higher than in most other
middle-income countries and significantly higher than in OECD countries.
Further, despite the implementation of a programme to simplify the rate
structure in 2000-01, the dispersion in tariffs has actually increased since
the beginning of the 2000s, indicating a less uniform structure. Lowering
tariff protection and tariff dispersion to OECD levels would be both
beneficial for economic performance and helpful in speeding Russias
accession to the World Trade Organisation (WTO), which has been under
negotiation for more than 15 years. WTO membership would in turn
exercise some leverage for making more progress with competitionenhancing reforms. As to foreign direct investment (FDI), inflows have,
until recently, been robust, but barriers to foreign ownership are
estimated to be high in Russia compared to OECD countries. In part, this
reflects the enactment in May 2008 of the law on strategic industries,
which defines 42 sectors in which control by foreign investors requires
prior authorisation from a government commission. Although this law
increases transparency and is less ad hoc than the previous regime, its
sectored coverage is broader and notification delays longer than OECDrecommended practice. The emergence of large state-controlled
conglomerates with dominant market positions also acts as a barrier to
FDI inflows. The scope for foreign investors to acquire equity in these
conglomerates or participate in government procurement contracts in the
sectors they occupy is strictly limited. Beyond explicit barriers to FDI, the
overall regulatory environment in Russia is perhaps the most significant
impediment to greater inflows of FDI. The government should increase the
openness and predictability of the foreign investment regime, review the
list of strategic sectors and ensure a level playing-field between domestic
and foreign firms with respect to government procurement and access to
subsidies.
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