Real estate investments are characterized as being capital intensive, low in liquidity and slow in payback while sufferi
Posted: Thu Apr 28, 2022 1:42 pm
Real estate investments are characterized as being capital
intensive, low in liquidity and slow in payback while suffering
from several uncertainties regarding demand, sale price/m2 , land
cost, etc. that increase the risk perceived by investors. Several
options such as information acquisition, deferral and abandonment
of the project are usual in the sector that, if properly managed,
may increase the value of the investment and reduce its risk
exposure. A residential housing development, however, is not
usually built in a single phase but as a series of sequential
decisions . This is a way to diversify risk since uncertainty
during the first launch is higher than in the later ones, and thus
the corresponding market price is considerably lower in the initial
phasethan in subsequent ones. This corresponds to the sequential
strategy, where risks are faced in sequence with relatively smaller
increments at every phase of the project, but at the expense of
relatively higher construction costs. In sequential strategy, the
initial outflow is lower than in the simultaneous case and the
expected inflows of previous phases may finance subsequent ones.
Before the first phase, the property developer analyzes diverse
information relative to market potential, target consumer, revenue
per-capita, price levels, empty lots, unsold units, etc. in order
to maximize the project's value. But it is only after the first
phase when the investor obtains relevant information about the
housing investment, either for future expansions or development of
the potential local market. It is very important to do the economic
base analysis in assessing potential real estate investment,
because market rents for properties depend on the economic base, as
well as on the supply and demand for space of tenants. Based on the
information's you are required to answer the following 1.Critically
evaluate how market forces affect both the supply and demand for
space and how these factors affect the real estate investment with
suitable example and explain with the help of a graph. ( 3 pages)
2. Evaluate how the changes in the market rental rate due to
changes in supply and demand can affect the income potential of a
possible investment as well as the volatility in income. ( 4 pages)
3.Evaluate the factors that motivate the investors to make an
equity investment in incomeproperties and various investment styles
used by Real Estate Investors. ( 5 pages)
plz write as a report
intensive, low in liquidity and slow in payback while suffering
from several uncertainties regarding demand, sale price/m2 , land
cost, etc. that increase the risk perceived by investors. Several
options such as information acquisition, deferral and abandonment
of the project are usual in the sector that, if properly managed,
may increase the value of the investment and reduce its risk
exposure. A residential housing development, however, is not
usually built in a single phase but as a series of sequential
decisions . This is a way to diversify risk since uncertainty
during the first launch is higher than in the later ones, and thus
the corresponding market price is considerably lower in the initial
phasethan in subsequent ones. This corresponds to the sequential
strategy, where risks are faced in sequence with relatively smaller
increments at every phase of the project, but at the expense of
relatively higher construction costs. In sequential strategy, the
initial outflow is lower than in the simultaneous case and the
expected inflows of previous phases may finance subsequent ones.
Before the first phase, the property developer analyzes diverse
information relative to market potential, target consumer, revenue
per-capita, price levels, empty lots, unsold units, etc. in order
to maximize the project's value. But it is only after the first
phase when the investor obtains relevant information about the
housing investment, either for future expansions or development of
the potential local market. It is very important to do the economic
base analysis in assessing potential real estate investment,
because market rents for properties depend on the economic base, as
well as on the supply and demand for space of tenants. Based on the
information's you are required to answer the following 1.Critically
evaluate how market forces affect both the supply and demand for
space and how these factors affect the real estate investment with
suitable example and explain with the help of a graph. ( 3 pages)
2. Evaluate how the changes in the market rental rate due to
changes in supply and demand can affect the income potential of a
possible investment as well as the volatility in income. ( 4 pages)
3.Evaluate the factors that motivate the investors to make an
equity investment in incomeproperties and various investment styles
used by Real Estate Investors. ( 5 pages)
plz write as a report