Real Estate Analysis: A Toolkit for Property Analysts

Real Estate Analysis: A Financial Toolkit presents economic and financial models, applications and insights, packaged as a toolkit for analysts and other participants in commercial and residential real estate markets.

Participants in property markets - analysts, brokers, commentators as well as investors and tenants move seamlessly across a range of physical and financial markets. They employ models that illuminate market activity: the tools of supply and demand to explain rental trends and to forecast vacancy rates and construction cycles; forecasts of macro-economists foreshadow shoppers' spending behaviour in shopping malls and the growth in demand for office space; capital market arithmetic to apply discount and capitalisation rates. Currently these topics are scattered through textbooks. This book brings these tools together and situates them in a real estate market context..

Topics addressed include:

• The interaction of markets - capital, space and physical assets
• Debt, the cost of capital and investment hurdle rates
• Real options - valuing lease contracts and land values
• Risk - what counts, what doesn't (systemic and non-systemic risk)
• Discounted rates and capitalisation rates - interpreting spreads to sovereign bond yields
• Externalities - why do markets "fail"; what are the "solutions"?
• Property rights - different rules, different outcomes
• Exploitation for natural resources (exhaustible, renewable) - how does DCF fit in?
• Cost benefit analysis - the analytics of compensation payments
• Forecasting - purpose and process

This book will complement, sometimes challenge, standard texts in real estate training programs. The target audience is curious professionals and ambitious scholars, seeking insights beyond standard class-room fare.