16642 Property Investment and Valuation
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Subject handbook information prior to 2024 is available in the Archives.
Credit points: 6 cp
Result type: Grade and marks
Requisite(s): 16234 Property Valuation
These requisites may not apply to students in certain courses. See access conditions.
Description
This is a core subject usually taken in the second year of the Bachelor of Property Economics. The subject focuses on property investment and valuation for various types of properties and stakeholders, mainly using discounted cash flow analysis. The subject encourages students to develop cash flow models for investment and valuation decisions, as well as to conduct sensitivity and scenario analyses using Excel software. Students learn through online activities, group discussions, software learning, independent reading, and real estate case competition. Students should therefore have access to a laptop during Tutorials with Excel software.
The knowledge and skills learned from the subject have practical implications as they can assist students in making decisions in real-life investment projects. The contents of the subject include basic concepts of investment theory and financial mathematics, net present value, internal rate of return, and their applications. Factors that affect investment decisions will also be discussed.
Assessment is designed to assure students' proficiency in achieving the learning objectives of this subject. Students are required to select a real-life investment project for an Individual Assignment to apply knowledge learned from the classes. In addition, students participate in a Group Assignment on a real estate case competition project. The final examination tests students' understanding of investment principles and problem-solving ability in making investment decisions.
Subject learning objectives (SLOs)
On successful completion of this subject, students should be able to:
| 1. | Apply key investment theories and investment appraisal techniques in making property investment decisions. |
|---|---|
| 2. | Develop critical thinking skills by identifying and assessing factors that impact on investment decisions and risk analysis. |
| 3. | Develop discounted cash flow (DCF) models, conduct sensitivity and scenario analysis in Excel. |
| 4. | Source appropriate information and data for developing DCF models. |
| 5. | Analyse, structure and report the results of findings from DCF modelling |
| 6. | Work effectively with team members in a professional manner. |
Course intended learning outcomes (CILOs)
This subject also contributes to the following Course Intended Learning Outcomes:
- Work effectively in a team in a professional context (C.2)
- Analyse data to make investment decisions in various contexts (P.2)
- Engage in critical and reflective thinking in built environment contexts (R.1)
- Source, evaluate and use information within defined parameters (R.2)
- Critically analyse, structure and report the results of research (R.3)
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 weekly. Students' learning experiences consist of self-directed reading, attending classes, workshops, and tutorials, discussing with groups, conducting online and class quizzes, and writing a report.
Prior to the classes, students will engage in independent study through pre-requisite reading on the real estate investment process, risk-return decisions, and financial mathematics, which will be used to facilitate in-class discussions and activities, as well as through an online quiz. These activities will assist students in better understanding basic concepts and knowledge related to the subject topics and in developing their own abilities related to self-directed, independent learning.
The first week of the class will focus on investment concepts, the real estate investment process, and risk-return investment decisions. Students will then engage in calculation practices using financial mathematics and techniques of investment appraisal and learn discounted cash flow (DCF) models. The knowledge gained from the first six weeks offers a theoretical base and provides students with basic concepts that can be used to evaluate investment alternatives and make investment decisions.
Students will learn DCF modelling and sensitivity and scenario analysis techniques with a step-by-step approach in computer workshops or online video clips. DCF modelling is an important skill for students not only in conducting their assignments, but also in future subjects such as property finance and the capstone project, and in pursuing a particular financial analyst position in the real world. The final few weeks of the class concentrate on studying the investment environment and risk analysis, as well as applying the learning knowledge to different types of investments and stakeholders. The mode of real estate case competition provides an opportunity to better understand real estate investment and engage with industry leaders.
This subject also helps you develop academic and professional language and communication skills to succeed at university and in the workplace. During the course of this subject, you will complete a milestone assessment task that will, in addition to assessing your subject-specific learning objectives, assess your English language proficiency.
Content (topics)
This subject includes contents as follows:
- The real estate investment process
- Risk-return concepts
- Real estate investment mathematics: present value, future value, the net present value
- Investment appraisal techniques: discounted and non-discounted evaluation methods
- Factors that influence property investment decisions
- Discounted cash flow (DCF) modelling
- Sensitivity and scenario analysis in DCF models including optionality
- Applications of DCF modelling from the perspective of different stakeholders
Assessment
Assessment task 1: Investment and Valuation Decision Using DCF
| Intent: | The aim of this assessment is to develop students' ability to make property investment and valuation decisions and to analyse risks using the DCF model technique. Students are required to investigate a commercial, industrial, or retail income-producing property; search for relevant information for evaluating the property; apply appropriate theory; develop a DCF model and conduct sensitivity and scenario analysis for the selected investment property. The investment decisions and risk analysis should be delivered in a report, as would be done in the industry. Please refer to the assessment task sheet for more details. This task also includes a milestone assessment component that evaluates English language proficiency. You may be guided to further language support after the completion of this subject if your results in this milestone task indicate you need more help with your language skills. | ||||||||||||||||||||||||
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| Objective(s): | This task addresses the following subject learning objectives: 1, 2, 3, 4 and 5 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.2, R.1, R.2 and R.3 | ||||||||||||||||||||||||
| Type: | Report | ||||||||||||||||||||||||
| Groupwork: | Individual | ||||||||||||||||||||||||
| Weight: | 30% | ||||||||||||||||||||||||
| Criteria linkages: |
SLOs: subject learning objectives CILOs: course intended learning outcomes |
Assessment task 2: Real Estate Case Competition
| Intent: | The aim of this assessment is to evaluate students’ ability to apply the learned knowledge to solve the problem for a real project. Each presentation team will be strictly limited to 6 students for 20 minutes in length of presentation. The team will be assessed on the analysis, ability to answer questions, and overall presentation. Refer to the assessment document for more details. | ||||||||||||||||
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| Objective(s): | This task addresses the following subject learning objectives: 1, 2 and 6 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.2, P.2 and R.1 | ||||||||||||||||
| Type: | Presentation | ||||||||||||||||
| Groupwork: | Group, group and individually assessed | ||||||||||||||||
| Weight: | 30% | ||||||||||||||||
| Criteria linkages: |
SLOs: subject learning objectives CILOs: course intended learning outcomes |
Assessment task 3: Theory and Calculation
| Intent: | The aim of this assessment is to evaluate students’ understanding of theories and techniques to make investment and valuation decisions for various income–producing properties and stakeholders. This is a close-book examination consisting of multiple choices, short answer questions, calculations and problem solving questions simulating real-world scenarios. Refer to assessment document for more details. | ||||||||||||
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| 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.2 and R.1 | ||||||||||||
| Type: | Examination | ||||||||||||
| Groupwork: | Individual | ||||||||||||
| Weight: | 40% | ||||||||||||
| 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 the subject they are enrolled in to remain eligible for assessment.
Students are required to attend lectures, computer workshops, tutorials and teamwork meetings.
Required texts
Jaffe, A.J. and Sirmans, C.F. (2001) Fundamentals of real estate investment, 3rd edition, South-Western Thomson Learning.
Recommended texts
Rowland, P. (2010), Australian Property Investment and Financing, Sydney: Thomson Reuters.
Frino, et al. (2009), Introduction to Corporate Finance, Pearson/Prentice Hall.
Rees, D. (2018) Global real estate data - new demands, old challenges. World Economics, 18(1), pp 35-46.
Shapiro, E., Mackmin, D. and Sams, G. (2013) Modern Methods of Valuation, Routledge.
Fischer, D (2000), Income Property – Analysis and Valuation, FP Media.
Brueggeman, W. B and Fisher, J D (2008), Real Estate finance and Investment, 13th edition, McGraw-Hill.
Hoesli, M and Macgregor, B D (2000), Property Investment – principles and practice of portfolio management, Longman.
Patrick, R (1997), Property investments and their financing, North Ryde, N. S. W. LBC Information Service.
Peirson, G; Brown, R and Howard, P (2000), Essentials of Business Finance, Sydney: McGraw-Hill.
Scott, D F; Martin, J D; Petty, J W and Keown, A J (1999), Basic Financial Management, NJ: Prentice Hall.
Waxman, P (2004), Investing in residential property – understanding the Australian property market, 6th edition, Wrightbooks.
Introduction to Excel (Provided on Canvas)
Professional Reports
Knight Frank: http://www.knightfrank.com.au/research/
Colliers: https://www.colliers.com.au/