This program is ideal for real estate professionals and corporate executives including:

• Real Estate Investors and Analysts
  
• Urban Planners and Project Managers
• Real Estate Planning and Strategy Professionals
• Real Estate Finance and Accounting Professionals
• Bankers, Lenders and Real Estate Fund managers
• Property Owners and Support Personnel

• Gain a clear understanding of what determines the value of real estate assets and development projects.
  
• Learn robust real estate analysis techniques.
• Explore the dynamic risk profile of investments in development projects and contrast them with ownership of real estate assets. 
• Improve your understanding of drivers of risk across real estate asset classes.
• Appreciate financial and space market perspectives of real estate. 
• Comprehend the role financial leverage plays in real estate decisions.
• Examine supply and demand dynamics that shape real estate cycles.
• Place your analysis within the context of macro-economic factors.
• Appreciate the multi-faceted skills and disciplines central to real estate development.

Around the world, real estate constitutes approximately one-third of all capital assets. You simply cannot ignore it as a business opportunity. An understanding of what determines the value of income properties is essential to making intelligent decisions to develop, finance, manage, sell or buy real estate assets.

This course provides students with an appreciation of real estate finance and valuation principles and practices using modern finance and economics framework. Though we will explore and develop simple rules of thumb, the main thrust would be the application of discounted cash flow techniques to analyze and value real property and developments. We will weave a thorough understanding of how financing decisions impact value, particularly in the context of the idiosyncrasies of emerging economies. 

Without a solid appreciation of underlying risk and return equation, evaluations of real estate developments can easily be flawed. Real estate development is significantly higher-risk than the ownership of real estate assets, particularly early in the development cycle. 

That requires a good understanding of both modern finance and economics, and the institutional features that differentiate real estate from other asset classes and markets. We’ll, therefore, dedicate part of the discussion to understanding urban economics and broader macro-economic factors that influence real estate decision-making.

1. Foundational Principles and Income Capitalization

Drivers of value underlying real estate assets.
Relating key drivers of risk for developments and properties.
Why are developments riskier than properties?
Property value as the benefit side of real estate development cost-benefit equation.
Simple models of real estate analysis using cash flow perpetuities.
Role financial leverage plays.
Deconstructing capitalization rates.
A critical review of Internal Rate of Return (IRR).

2. Organizing and Analysis Information

Accounting concepts of relevance in real estate.

Devising a real estate financial statement.

Components of a real estate setup.

Available sources of information.

Framework for real estate analysis.

3. Overview of Real Estate Valuation

Cash flow-based frameworks for real estate valuation.

Issues in projecting cash flows for real estate investments.

Identifying drivers in real estate market analysis.

Practical insight into discount rates.

4. Evaluation Development Projects

Graaskamp model of real estate development.

‘Back of the envelope’ static analysis of real estate development projects.

View real estate property as the “end product” in development.

Phases in development.

NPV framework for development projects.

“Embedded” leverage in real estate developments.

Variation in risk across the development horizon

Cost of capital for development projects.

Pitfalls using IRR in evaluating developments.

What to maximize: land value or developer profits.

5. Understanding Land Value

Land value in the context of urban economics.

Limitations of discounted cash flow based techniques in valuing land.

Development as a real option in assessing land value.

6. Real Estate and Urban Economics

How urban growth impacts real estate values.
Supply and demand dynamics.

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