12535 Property Investment and Development Feasibility

Description

This is a core subject in the Master of Real Estate Investment and Master of Property Development programs.

The subject sets out why modeling and feasibility analysis are carried out and the logic behind the methodologies used. Linked to this, the terminology and formulas that run through real estate modeling are explained on the first day and are the basis of the first of the three assignments for the course.

The subject gives an understanding of the basic principles involved in carrying feasibilities. Rather than using proprietary models, the course aims to consider first principles to give an in-depth understanding of the sensitivities within models. To do this, Excel spreadsheets are used for the creation of analytical models, thereby giving students a solid foundation for the potential future use of proprietary modeling programs.

The subject focuses on developing feasibility models for income-producing investments such as Retail, Office, and Industrial properties, and property development projects mainly applying discounted cash flow (DCF) analysis. The subject also enables students to obtain DCF modeling skills valuing land acquisition, investment, or development projects affected by changing conditions. The sensitivity factors that affect the feasibility of property investment and development projects are discussed. Basic concepts of financial analysis, e.g., time value of money, rentals, and terminology such as CAPEX that relate to feasibility analysis are studied. Student learning experiences include class engagement in discussion, DCF modeling practice, online activities, group discussions, and self-learning opportunities.

Knowledge and modeling skills learned from the subject can assist students in making decisions in real-life investment and development projects. Examples of subject contents include cash flows, time value of money, project returns, Net Present Value (NPV), Internal Rate of Return (IRR), rentals, Development and Operating costs, and how those elements affect feasibility decisions.

Assessment is designed to ensure students’ learning objectives are achieved upon completing the subject. Students are provided a real-life assignment aiming for them to understand the theory of DCF analysis, know to identify and source variables that are considered in investment and development projects and be able to interpret NPV and IRR results using DCF modeling skills. Students are tested on their understanding of DCF principles and problem-solving ability in conducting a feasibility analysis.

Typical availability

Autumn session, City campus
Spring session, City campus