Risk analysis in the real property development process: a conceptual framework and a computer simulation model

Miles, Michael V.; Wurtzebach, Charles H.

doi:10.1016/0148-2963(77)90019-4

Cited by 5 publications

(2 citation statements)

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“…These processes are well captured in Property Development which provides a comprehensive scope of production (Millington, 2015). Further, scholars in the past like Grasskamp (1972) and Miles and Wurtzebach (1977) laid strong foundation on the real production processes that functionally defines the roles of a real estate professional, something that contemporary scholars like Rottke (2017) and Lemen (2022) have reiterated. Therefore, ILO should revise these classifications to reflect what is due to real estate and its professionals.…”

Section: Discussionmentioning

confidence: 99%

What is real estate? Five ontological questions for the discipline

K'Akumu

2023

JERER

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PurposeThe study seeks to identify and document definitional challenges that hamper the delineation of the scope of real estate as a discipline and as an industry. Through literature review the article distils the perception of body of knowledge (BOK) of real estate within the academia. Two main issues are flagged up: the problem of undefined BOK and the collegiate dilemma. Later the study looks at the standard economic classification documents to capture the occupational domains of real estate professionals or real estate activities. These steps are necessary to help define an alternative academic, practical and social meaning of real estate that is sufficient and precise.Design/methodology/approachThe study uses literature review and, as primary method, qualitative document analysis (QDA). The study has made a special appeal for the application of qualitative strategy in real estate research other than following the methodological orthodoxy of quantitative causal research designs. Further, it has argued for the recognition of QDA as a legitimate research method in the context of real estate studies. Consequently, the study performed QDA procedures on international economic classification standards.FindingsFrom literature review and QDA, the study identified five definitional problems in the meanings or understandings of real estate: undefined body of knowledge, collegiate dilemma, inadequate classification of real estate occupations, inadequate industry classification and inadequate economic sector positioning. These are aspects that lead to misconceptions of the true boundary of knowledge in society and in the academia. The paper offers clarity and insights for the redrawing of these boundaries to give real estate its rightful place in the academia and in the real world.Originality/valueThe article follows up on the academic and social misconceptions on the BOK of real estate as a discipline and an economic activity domain to identify the contribution of real estate to the welfare of mankind. Ontology or the organization of academic or social knowledge is used to map out or catalogue real estate against competing domains and to show that the role of real estate is grossly understated and misunderstood. From the findings, the study makes recommendations to university curriculum developers, and international organizations like ILO, and UN-DESA to revise their conceptions of real estate to give the discipline its rightful position in society.

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Section: Discussionmentioning

confidence: 99%

What is real estate? Five ontological questions for the discipline

K'Akumu

2023

JERER

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“…Monte Carlo simulation has been an important component of quantitative risk assessment since the mid 1960s (Hertz, 1964). Many authors have been particularly concerned with the application of these ideas to property investment and property development (for example, see MacFarlane, 1990; Martin, 1978; Miles and Wurtzebach, 1971; Peiser, 1984; Pelatt, 1972; Vernor, 1989). Unfortunately, this accumulated literature seems to have had little, if any, impact on the practice of property investment or property development as far as financial risk assessment is concerned.…”

Section: Introductionmentioning

confidence: 99%

The use of simulation in property investment analysis

Macfarlane

1995

Journal of Property Valuation and Investment

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Simulation is a powerful analytical tool which facilitates an investigation of financial risk through the examination of repeated outcomes from the same model. It is not, however, an easy matter to use simulation in a property investment context due to the existence of complex relationships between the fundamental components (such as the periodic cash flows, vacancy rates, letting up periods and capitalization rates). Seeks to examine a simple investment scenario in which the variations in net annual cash flows and final capitalization rate determine the overall viability of the investment. Shows that the relationship between these two variables and between the net annual cash flows over time significantly increases the investment′s risk. The use of asymmetric variables to describe these property characteristics is also discussed as are the interpretation of “expected” outcomes as either the “average” and the “most likely” result. These are all critical considerations if the simulation model is to provide a reasonable representation of the true investment situation and for the simulation results to be useful in the investment decision‐making process.

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Risk Analysis in Land Development

Peiser

1984

Real Estate Economics

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Land development poses a different set of risks from income-producing property. This paper explores the nature of land development risk with particular reference to large-scale subdivision development. Because several major variables in land development analysis are correlated, meaningful risk analysis requires that intercorrelation be explicitly recognized and incorporated into simulations. A case study is presented which demonstrates the application of risk analysis to land development and the handling of intercorrelation among random variables. Copyright American Real Estate and Urban Economics Association.

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Risk analysis in the real property development process: a conceptual framework and a computer simulation model

Cited by 5 publications

References 1 publication

What is real estate? Five ontological questions for the discipline

What is real estate? Five ontological questions for the discipline

The use of simulation in property investment analysis

Risk Analysis in Land Development

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