12535 Property Investment and Development Feasibility
Warning: The information on this page is indicative. The subject outline for a
particular session, location and mode of offering is the authoritative source
of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.
Subject handbook information prior to 2023 is available in the Archives.
Credit points: 6 cp
Subject level:
Postgraduate
Result type: Grade and marksThere are course requisites for this subject. See access conditions.
Description
This is a core subject in the Master of Real Estate Investment and Master of Property Development programs.
The subject sets out why modelling and feasibility analysis is carried out, the logic behind the methodologies used. The subject gives an understanding of the base principles involved in carryout feasibilities and uses Excel spreadsheets for the creation of the analytical models, thereby giving students a solid foundation for potential future use of proprietary modelling 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 modelling skills valuing land acquisition, investment or development projects affected by changing conditions. The sensitivity factors that affect feasibility of property investment and development projects are discussed. Basic concepts on financial analysis, e.g., time value of money, rentals, and terminology such as CAPEX that relate to feasibility analysis are studied. Students' learning experiences include class engagement in discussion, DCF modelling practice in computer laboratory, online activities, group discussions and self-learning opportunities.
Knowledge and modelling skill 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 assure 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, be able to interpret NPV and IRR results using DCF modelling skills. Students are tested on understanding of DCF principles and problem-solving ability in conducting feasibility analysis.
Subject learning objectives (SLOs)
On successful completion of this subject, students should be able to:
| 1. | demonstrate an understanding of the rationale of conducting feasibility analysis and modelling |
|---|---|
| 2. | identify and source relevant cash flows that related to investment and development projects |
| 3. | demonstrate an understanding of DCF analysis and develop DCF models using excel modelling skills. |
| 4. | analyse DCF modelling results affected by changed project conditions. |
Course intended learning outcomes (CILOs)
This subject also contributes to the following Course Intended Learning Outcomes:
- Effectively apply a variety of communication skills and technologies in professional contexts (C.1)
- Develop alternative, appropriate creative solutions to built environment issues (I.1)
- Demonstrate a comprehensive theoretical understanding of property valuation methodologies together with the capacity to prepare valuation assessments to a professional standard (P.1)
- Apply a comprehensive understanding of property market drivers and key risk analysis techniques applicable to contemporary industry based practice (P.3)
- Demonstrate knowledge of research principles and methods applicable to property development (R.1)
Contribution to the development of graduate attributes
The term CAPRI is used for the five Design, Architecture and Building faculty graduate attribute categories where:
C = communication and groupwork
A = attitudes and values
P = practical and professional
R = research and critique
I = innovation and creativity.
Course intended learning outcomes (CILOs) are linked to these categories using codes (e.g. C-1, A-3, P-4, etc.).
Teaching and learning strategies
This subject is delivered face-to-face in two blocks. Students’ learning experiences include attending classes, self-directed reading, participating class discussion, conducting quizzes on Canvas, and completing assessments.
Students’ learning starts with independent study on Canvas platform prior to the first block classes. Students read the pre-requisite reading material and watch or listen the provided online videos and conduct quizzes on Canvas. The prior learning activities will assist with students in better understanding basic concepts and knowledge related to the subject topics and in developing students’ self-directed independent learning ability.
Block one focuses on the basic financial and valuation concepts, feasibility decision and modelling skills. Students will be developed an understanding of time value of money, project returns, and valuation related terminology. The learnt knowledge will assist students to learn DCF modelling techniques with step-by-step approach using excel software.
The second block focuses on feasibility application. Students apply the learnt knowledge and modelling skills from the first block to different types of asset classes such as income-producing and development projects, as well as analyse the factors that impact on feasibility results.
Students are also facilitated to develop creative and critical thinking skills. Students will complete a milestone assessment tasks during learning of this subject for developing academic and professional language and communication skills.
Content (topics)
- Time value of money
- Cash flows
- Valuation
- DCF modelling
- Feasibility Analysis
Assessment
Assessment task 1: In Class Test
| Intent: | This QUIZ will provide students an opportunity to understand the financial theory and basic concepts relevant to feasibility study. Feedback will be provided immediately after the quiz through discussion of the results. Please refer to assessment documents for model details. | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Objective(s): | This task addresses the following subject learning objectives: 1 and 2 This task also addresses the following course intended learning outcomes that are linked with a code to indicate one of the five CAPRI graduate attribute categories (e.g. C.1, A.3, P.4, etc.): P.1 and P.3 | ||||||||||||
| Type: | Quiz/test | ||||||||||||
| Groupwork: | Individual | ||||||||||||
| Weight: | 20% | ||||||||||||
| Criteria linkages: |
SLOs: subject learning objectives CILOs: course intended learning outcomes |
Assessment task 2: Development Feasibility Modelling
| Intent: | The aim of this assessment is to develop students’ ability to develop feasibility models using DCF modelling technique. Students’ learning experiences involve with investigating a commercial, industrial or retail income-producing property, searching for relevant information and developing a DCF model for the selected investment property. You are required to explain how the DCF model is developed and results. The investment property can be found from real estate sales website such as commercialrealestate.com.au. Please refer to the assessment document for more details. | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Objective(s): | This task addresses the following subject learning objectives: 2, 3 and 4 This task also addresses the following course intended learning outcomes that are linked with a code to indicate one of the five CAPRI graduate attribute categories (e.g. C.1, A.3, P.4, etc.): C.1, P.1 and P.3 | ||||||||||||||||
| Type: | Report | ||||||||||||||||
| Groupwork: | Individual | ||||||||||||||||
| Weight: | 30% | ||||||||||||||||
| Criteria: | This is an individual assignment focusing DCF model development. | ||||||||||||||||
| Criteria linkages: |
SLOs: subject learning objectives CILOs: course intended learning outcomes |
Assessment task 3: Final Exam
| Intent: | The aim of this assessment is to develop students’ ability to analyse property development feasibility using DCF modelling skills. Students learning experience include explaining the factors that affect development feasibility, income projections, and skills using for developing a DCF model, analysing results and conducting sensitivity analysis for a given project. | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Objective(s): | This task addresses the following subject learning objectives: 2, 3 and 4 This task also addresses the following course intended learning outcomes that are linked with a code to indicate one of the five CAPRI graduate attribute categories (e.g. C.1, A.3, P.4, etc.): C.1, I.1 and R.1 | ||||||||||||||||||||
| Type: | Examination | ||||||||||||||||||||
| Groupwork: | Individual | ||||||||||||||||||||
| Weight: | 50% | ||||||||||||||||||||
| Criteria: | This is an individual assignment focusing on analysing DCF feasibility models. | ||||||||||||||||||||
| Criteria linkages: |
SLOs: subject learning objectives CILOs: course intended learning outcomes |
Minimum requirements
The DAB attendance policy requires students to attend no less than 80% of formal teaching sessions (lectures and tutorials) for each class they are enrolled in to remain eligible for assessment.
Recommended texts
There is not a required textbook for this subject. Students are encouraged to search relevant books or articles for self-directed learning.
Study References
Extensive online learning resources will be provided on Canvas.
- Fischer, D (2000), Income Property – Analysis and Valuation, FP Media.
- Frino, et al. (2006), Introduction to Corporate Finance, Pearson/Prentice Hall.
- Petty, et al (2008) or later year, Financial Management – Principles and Applications, 5th edition, Pearson/Prentice Hall (or later version).
- Rowland, P. (2010), Australian Property Investment and Financing, Sydney: Thomson Reuters.
- Rees, D. (2018) Global real estate data - new demands, old challenges. World Economics, 18(1), pp 35-46.
Professional Reports
- Knight Frank: http://www.knightfrank.com.au/research/
- Colliers: https://www.colliers.com.au/
References
Referencing: In the Faculty of DAB, referencing is done using the APA 7th edition referencing style.
Referencing is a standardised method of acknowledging sources of information and ideas that you have used in your assignments or research, in a way that uniquely identifies the source. It is not only necessary for avoiding plagiarism, but also for supporting your ideas and arguments.
The UTS Library has developed additional support materials to guide students in the use of the APA referencing style.
Further support may be accessed via visiting the following link: https://www.lib.uts.edu.au/help/referencing/apa-referencing-guide
Other resources
A laptop with Microsoft Excel software.