Risks Assessment In Real Esate Investments: An AHP Approach

D’Alpaos, Chiara; Canesi, Rubina; Adegoke, O. J.

doi:10.15396/eres2015_98

Cited by 8 publications

(11 citation statements)

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“…The identification and assessment of risk and uncertainty within the scope of property valuations is currently one of the key concerns in contemporary valuation literature [27,28]. Uncertainty is defined as "the state of being uncertain; doubt; hesitancy" and, as a result, neither loss nor gain is necessarily associated with uncertainty; it is simply missing certainty [29].…”

Section: Uncertainty and The Importance Of Risk Assessmentmentioning

confidence: 99%

“…Uncertainty is defined as "the state of being uncertain; doubt; hesitancy" and, as a result, neither loss nor gain is necessarily associated with uncertainty; it is simply missing certainty [29]. Risk, in contrast, is usually defined as the volatility, quantified through the variance or standard deviation of its returns [27]. The application of risk analysis in the construction industry is not as common as other sectors, such as insurance or finance [30,31].…”

Section: Uncertainty and The Importance Of Risk Assessmentmentioning

confidence: 99%

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Enhanced Cash Flow Valuation in Real Estate Management by Integrating Innovative Materials and Risk Assessment

et al. 2020

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Environmental criteria have become a critical issue for the evaluation of projects and products, particularly for businesses with extensive life cycles. Sustainability criteria and project risk management are underexplored in real estate development, and thus endanger business survival. The aim of this article is to improve the understanding of uncertainties in the real estate industry by using a stochastic risk assessment approach and to broaden the risk assessment methodology. Thus, this article investigates the importance of material selection regarding external and project risk for real estate development. Aside from conventional projects, risks are analyzed for projects with high-quality materials (HQMs) that are characterized by environmental benefits. In following a mixed method approach, we began by conducting interviews with developers about the most important risks, and later incorporating these factors into a stochastic cash-flow model. Finally, we illustrated our findings in a case study. Overall, the highest risks were shown from resource prices and changing regulations, while the rankings of the two materials differ slightly; HQMs rank higher on the created risk index than conventional materials. The cash-flow model shows that conventional materials perform slightly better than HQMs, although uncertainties within the calculations are similar. The article contributes to risk management and decision-making for real estate projects by providing insights into the discussion and analysis of the financial performance of sustainable construction material and design that might be crucial for disruptive innovations. We present a model that integrates environmental and long-term effects in the cash-flow evaluation of real estate projects, thereby increasing managerial flexibility.

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Section: Uncertainty and The Importance Of Risk Assessmentmentioning

confidence: 99%

Section: Uncertainty and The Importance Of Risk Assessmentmentioning

confidence: 99%

Enhanced Cash Flow Valuation in Real Estate Management by Integrating Innovative Materials and Risk Assessment

et al. 2020

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“…In order to achieve this, in each development stage, a two-step model is established: The first one includes a qualitative analysis to obtain each risk level priority, and the second one includes another qualitative assessment for the global risk premium of the investment project. The goals of the first step are to identify the factors that influence the global risk of a real estate investment project [29,30], establish the different risk levels to be considered for an investment, and conduct a qualitative assessment for the prioritization of such risk levels. The goals of the second step are to conduct a qualitative assessment to obtain the project's global risk premium as a function of the prioritization from the first step.…”

Section: Introductionmentioning

confidence: 99%

“…This model is a good alternative for calculating the risk premium of a real estate investment project in a scientific and mathematical way [22]. The main constraint could be that the results are only valid for a certain period of time during which the economic and financial variables do not change significantly [30]. Following changes, a new analysis of the variables must be done.…”

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confidence: 99%

Risk Premium Assessment for the Sustainable Valuation of Urban Development Land: Evidence from Spain

et al. 2019

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One of the most important parameters in sustainable urban land valuation is the risk premium. Correct assessment of the risk premium is essential for sustainable valuation. Generally, it is estimated that traditional financial models or historic rates do not take into account the specific risk factors of an investment project. In this paper, we propose a sustainable model to obtain it. It is based on investment risk factors and the urban planning land development stages. We conducted a study in Badajoz, Spain, on four urban stages: first, land without an execution program; second, land with an execution program; third, land with reparceling; and fourth, fully developed and urbanized land. We calculated one different risk premium value for each urban stage. The results show that with this model, we can obtain the risk premium at any time during urban planning development. The urban stage is one of the most influential factors in the risk premium value. It decreases during urban planning development, and fully developed and urbanized land has a lower risk premium.

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“…[6,17]. The continuous change of the boundary conditions [4,31,32,33] causes that it is necessary to use, rather than models characterized by a strong theoretical and methodological basis, "slender" models, able to operate even on limited data and to automatically capture the causal relations between explanatory variables and prices, as well as to predict property values in the short term [30].…”

Section: Introduction*mentioning

confidence: 99%

Property Valuations in Times of Crisis: Artificial Neural Networks and Evolutionary Algorithms in Comparison

Tajani

Morano

Locurcio

et al. 2015

Computational Science and Its Applications -- ICCSA 2015

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Abstract. In the current economic situation, characterized by a high uncertainty in the appraisal of property values, the need of "slender" models able to operate even on limited data, to automatically capture the causal relations between explanatory variables and selling prices and to predict property values in the short term, is increasingly widespread. In addition to Artificial Neural Networks (ANN), that satisfy these prerogatives, recently, in some fields of Civil Engineering an hybrid data-driven technique has been implemented, called Evolutionary Polynomial Regression (EPR), that combines the effectiveness of Genetic Programming with the advantage of classical numerical regression. In the present paper, ANN methods and the EPR procedure are compared for the construction of estimation models of real estate market values. With reference to a sample of residential apartments recently sold in a district of the city of Bari (Italy), two estimation models of market value are implemented, one based on ANN and another using EPR, in order to test the respective performance. The analysis has highlighted the preferability of the EPR model in terms of statistical accuracy, empirical verification of results obtained and reduction of the complexity of the mathematical expression.

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Risks Assessment In Real Esate Investments: An AHP Approach

Cited by 8 publications

References 0 publications

Enhanced Cash Flow Valuation in Real Estate Management by Integrating Innovative Materials and Risk Assessment

Enhanced Cash Flow Valuation in Real Estate Management by Integrating Innovative Materials and Risk Assessment

Risk Premium Assessment for the Sustainable Valuation of Urban Development Land: Evidence from Spain

Property Valuations in Times of Crisis: Artificial Neural Networks and Evolutionary Algorithms in Comparison

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