TRP624 International Real Estate Market Analysis

Project
Scenario: You are employed in the research department of
a leading firm of Chartered Surveyors and have been
commissioned to write a report for an investment client from
Turkey who has 600 million TL. The client is interested in
investing in residential property either in New York or
London or both. So you should be providing the details for
both cities (New York and London) and make a
recommendation. Client is looking for long term
investment, passive management.
The client is interested in acquiring residential (housing)
property in either London or New York. Both cities (New
York and London) should be analysed and compared.
Project Brief
• Employed by RE Service Provider to write a
report for a client from UK.
• Provide advice on (direct) investment in
residential (housing) market in London, New York
• Explain structure and operation of market
(general)
• Outline historic, recent and current trends
(specific)
• Assess future prospects and make specific
recommendation
Style of the report
• Report not essay; 2000-2500 words (approx)
• Use section headings (and sub-headings) Full
referencing
• Use diagrams and figures; and tables
• Should include primary/secondary evidence
• Must ensure balance between sections
• Must have an analytical edge
• Must address the brief
• Be aware of plagiarism-self plagiarism!
Structure of the report
• Executive Summary (around 100 words)
• Introduction
• Structure and operation of the international markets
(around 800 words)
• Analysis of the London-New York market (around 800
words)
• Conclusions and recommendations (around 800 words)
• References
• Appendices
*Tables, figures, appendices are not included in word count .
Structure and operation of the
international markets
• What do you know?
– Economic and Political dimensions of
international real estate markets
– International real estate investment strategies
– Re-examining market efficiency factors (from
Keogh and D’arcy 1994 )
• Do not over-complicate this! Keep it short
Structure and operation of the international markets
•Political-Economic Dimensions of International Real Estate
Markets’ should be mainly about the global activity of the
international real estate markets. How globalism affect the
IREM? technological changes for example.
• Second section is about the investment strategies, here
where you should focus on the concepts the exchange
rates, cultural/language factors, regulations, tax, political
instability .
•Third section is mainly about market efficiency, where you
should focus on market maturity and data transparency.
Data and analysis
• Quantitative Analysis: use MSCI data-don’t forget to use filter tool for
finding NY and London residential market , some of the values are in brackets
which means that they are negative values.
– market activity –performance measure (total return, income return,
capital growth) graphs can help to see the historical trend
– Formal forecasts (second hand?); (Simple) Expected return
(mean) and risk (standard deviation)- to use total return is fine
• Qualitative data:
– Political and economic stability, (in terms of political and
economical conditions, is it a safe place to invest, state the
reasons, also bear the currency changes in mind)
– legal framework (lease terms, property transactions, tax ,cost and
agency and etc)
– institutional characteristics (professional services, transparency,
access to information)
Expected Return: Average of Return (at a
certain time period)
Table: Total Return for City A and City B in the last 5 year
Return/Risk Analysis
2013 2014 2015 2016 2017
City A 4% %6 5% 6% 4%
City B 10% 2% %1 9% 3%
What is the average return for City A and City B?
Which one would you choose? Why?
Simply Calculate the average and standard deviation of
return. (please check the exercise at welcome page and week
5 lecture)
Is average return enough to make a decision?
How can we calculate risk?
Risk: Standard Deviation of Return (at a certain time period)
Conclusions and
recommendations
• Where to invest? (you could invest in two cities,
lets say 40% in London , 60% in NY) so:
• How much to invest? Invest all of your money,
don’t be tight!
• BUT WHY? Give full explanation, justification on
your decision.
• Please be careful about using references properly, check
for plagiarism in Turnitin.
• Don’t spend your money on essay writing services! Save
it for a nice holiday  (yes I do believe we will have nice
and relaxing days again!). To use these services has
serious consequences , please don’t dare!
• You can send me your questions if you have any
difficulties.
GOOD LUCK EVERYONE!