Throughout the decision-making process, prudent investors must address questions regarding the probabilities of future profit gain. In this study, the probability-based discounted cash flow （DCF） method with net pre...Throughout the decision-making process, prudent investors must address questions regarding the probabilities of future profit gain. In this study, the probability-based discounted cash flow （DCF） method with net present value （NPV） as the indicator was adopted as an analysis tool. A probabilistic framework for measuring exceeding probability of annual rate of return on a commercial real estate investment under a specified holding period was developed. Based on the framework, the relation curves of annual rate of return versus the corresponding exceeding probability of return for available financing schemes were constructed. These curves were used as a tool to prioritize the schemes and inform decision-making. An example case is presented to demonstrate the decision-making process developed in this study. Through the proposed process, investors are given basic information on the return, probability that profit gain will occur, and feasibility of financial schemes for commercial real estate investments.展开更多
The real estate sector is vital for ensuring human needs for living and activity. This fact conditioned the formation of a legal, normative and methodological framework specific to real estate, but also the investment...The real estate sector is vital for ensuring human needs for living and activity. This fact conditioned the formation of a legal, normative and methodological framework specific to real estate, but also the investment attractiveness of the field. Thus, the real estate consultant often solves technical, economic, legal, organizational problems, but the biggest responsibility rests with investment consulting. The applied methodologies, focused on evaluating the efficiency of investments, are not sufficient to propose to the investor a reasoned conclusion regarding the investment priority. In this article, the authors propose a useful tool for real estate consultants in order to reason the decision regarding the investment of funds in commercial real estate for the purpose of renting it out—the Maximum Global Utility (MGU) method. It is proposed to include in the analysis and the way of calculating the indicator “importance level of the real estate” which reflects the criterion of the best use. This indicator ensures the flexibility of the decision depending on the quality characteristics of the real estate.展开更多
文摘Throughout the decision-making process, prudent investors must address questions regarding the probabilities of future profit gain. In this study, the probability-based discounted cash flow （DCF） method with net present value （NPV） as the indicator was adopted as an analysis tool. A probabilistic framework for measuring exceeding probability of annual rate of return on a commercial real estate investment under a specified holding period was developed. Based on the framework, the relation curves of annual rate of return versus the corresponding exceeding probability of return for available financing schemes were constructed. These curves were used as a tool to prioritize the schemes and inform decision-making. An example case is presented to demonstrate the decision-making process developed in this study. Through the proposed process, investors are given basic information on the return, probability that profit gain will occur, and feasibility of financial schemes for commercial real estate investments.
文摘The real estate sector is vital for ensuring human needs for living and activity. This fact conditioned the formation of a legal, normative and methodological framework specific to real estate, but also the investment attractiveness of the field. Thus, the real estate consultant often solves technical, economic, legal, organizational problems, but the biggest responsibility rests with investment consulting. The applied methodologies, focused on evaluating the efficiency of investments, are not sufficient to propose to the investor a reasoned conclusion regarding the investment priority. In this article, the authors propose a useful tool for real estate consultants in order to reason the decision regarding the investment of funds in commercial real estate for the purpose of renting it out—the Maximum Global Utility (MGU) method. It is proposed to include in the analysis and the way of calculating the indicator “importance level of the real estate” which reflects the criterion of the best use. This indicator ensures the flexibility of the decision depending on the quality characteristics of the real estate.
