Black swan effects on the real estate environment: a conceptual framework

Abstract

Unpredictable events can have a major impact on real estate, yet they are often overlooked in many property decisions. This research looks at linking property market analysis to Black Swan (BS) Event theory, a term made famous by Taleb (2008) as those unpredictable disastrous events which have three key characteristics: rarity, extreme impact and retrospective predictability. The research takes the form of a narrative synthesis applying a literature review approach to define an extensive range of BS events into a conceptual framework so as to measure the impact on property markets with reference to risk and uncertainties. For property asset managers, this is important as BS events can be related to the impact on Place/location and Space/operation. To improve the resilience and reduce vulnerability towards these events, property strategies can embrace new disaster management research and so lower the impact of Place risk, although improved connectivity makes global organisations more vulnerable to space risk failure after a major BS Event. In this paper, BS management models are funnelled to the antifragility concept, as a positive sensitivity to increases in volatility. Finally, the study offers a conceptual framework of illustrating the relationship between BS effects and its respective fragile and antifragile strategies.