Real Estate Investment and Finance - Strategies, Structures, Decisions

The fully revised and updated version of the leading textbook on real estate investment, emphasising real estate cycles and the availability and flow of global capital
 
Real Estate Investment remains the most influential textbook on the subject, used in top-tier colleges and universities worldwide. Its unique, practical perspective on international real estate investment focusses on real-world techniques which measure, benchmark, forecast and manage property investments as an asset class. The text examines global property markets and real estate cycles, outlines market fundamentals and explains asset pricing and portfolio theory in the context of real estate.
 
In the years since the text's first publication, conditions in global real estate markets have changed considerably following the financial crisis of 2008-2009. Real estate asset prices have increased past pre-crisis levels, signalling a general market recovery. Previously scarce debt and equity capital is now abundant, while many institutions once averse to acquiring property are re-entering the markets. The latest edition - extensively revised and updated to address current market trends and practices as well as reflect feedback from instructors and students - features new content on real estate development, improved practical examples, expanded case studies and more. This seminal textbook:
* Emphasises practical solutions to real investing problems rather than complex theory
* Offers substantial new and revised content throughout the text
* Covers topics such as valuation, leasing, mortgages, real estate funds, underwriting and private and public equity real estate
* Features up-to-date sections on performance measurement, real estate debt markets and building and managing real estate portfolios
* Includes access to a re-designed companion website containing numerous problems and solutions, presentation slides and additional instructor and student resources
 
Written by internationally-recognised experts in capital management and institutional property investing strategies, Real Estate Investment, Second Edition: Strategies, Structures, Decisions is an indispensable textbook for instructors and students of real estate fund management, investment management and investment banking, as well as a valuable reference text for analysts, researchers, investment managers, investment bankers and asset managers.

List of contents

Acknowledgements xxi
 
About the Authors xxiii
 
Preface xxv
 
Part One Real Estate as an Investment: An Introduction
 
Chapter 1 Real Estate - The Global Asset 3
 
1.1 The Global Property Investment Universe 3
 
1.2 Market Players 6
 
1.2.1 Investors 6
 
1.2.2 Fund Managers 9
 
1.2.3 Advisors 9
 
1.3 Property - Its Character as an Asset Class 11
 
1.3.1 Property Depreciates 12
 
1.3.2 Lease Contracts Control Cash Flows 13
 
1.3.3 The Supply Side is Inelastic 13
 
1.3.4 Valuations Influence Performance 14
 
1.3.5 Property is Not Liquid 15
 
1.3.6 Large Lot Sizes Produce Specific Risk 16
 
1.3.7 Leverage is Commonly Used in Real Estate Investment 18
 
1.3.8 Property Appears to be an Inflation Hedge 19
 
1.3.9 Property is a Medium-Risk Asset 21
 
1.3.10 Real Estate Cycles Control Returns 22
 
1.3.11 Property Appears to be a Diversifying Asset 24
 
Specific Risk 27
 
Leverage 27
 
Illiquidity 28
 
Taxes, Currency, and Fees 28
 
1.4 Conclusion 28
 
Chapter 2 Global Property Markets and Real Estate Cycles, 1950-2020 33
 
2.1 Introduction and Background 33
 
2.1.1 The Property Cycle 33
 
2.2 A Performance History 34
 
2.2.1 Before 1970: Real Estate Becomes a Medium-Return Asset 34
 
2.2.2 The 1970s: Inflation, Boom, and Bust 36
 
The USA 36
 
The UK 37
 
2.2.3 The 1980s: New Investors Flood the Real Estate Capital Market 38
 
The USA 38
 
The UK 42
 
2.2.4 The 1990s: The Rise of REITs 43
 
The USA 43
 
The UK: Deep Recession, Low Inflation, and Globalization 45
 
2.2.5 2002-7: A Rising Tide Lifts All Boats 47
 
The USA 47
 
The UK 59
 
2.2.6 The Global Real Estate Credit Crisis Hits 60
 
The USA 60
 
The UK 67
 
2.2.7 The Markets Recover Post-crisis 70
 
2.3 The Global Market 72
 
2.3.1 The European Market Develops 72
 
2.3.2 Asia Emerges 75
 
2.4 Real Estate Cycles: Conclusion 80
 
Lesson 1: Too Much Lending to Property is Dangerous 80
 
Lesson 2: Yields are Mean-Reverting - Unless Real Risk-Free Rates Change 81
 
Lesson 3: Look at Yields on Index-Linked 81
 
Chapter 3 Market Fundamentals and Rent 83
 
3.1 Introduction: The Global Property Cycle and Rent 83
 
3.2 The Economics of Rent 84
 
3.2.1 Rent and Operational Profits 84
 
3.2.2 Theories of Rent 86
 
Ricardo 86
 
von Thünen 87
 
Fisher 89
 
3.2.3 Rent as the Price of Space 90
 
3.2.4 Supply 91
 
3.2.5 Demand 93
 
The Cyclical Demand for Space 93
 
The Structural Demand for Space 94
 
Variations in Locational Demand by Use 95
 
3.2.6 The Relationship Between Rental Value and Rental Income 97
 
3.2.7 The Impact of Currency Movements on Rent 99
 
3.2.8 Property Rents and Inflation 99
 
3.3 Forecasting Rents 101
 
3.3.1 Forecasting National Rents 101
 
Model Types 101
 
Price 102
 
Demand 102
 
Supply 102
 
Building the Model 104
 
An Historical Model 104
 
A Forecasting Model 105
 
3.3.2 Forecasting at the Local Level 105
 
Conceptual and Modelling Problems 106
 
Data Issues 106
 
3.4 Conclusion 107
 
Chapter 4 Asset Pricing, Portfolio Theory, and Real Estate 109
 
4.1 Risk, Return, and Portfolio Theory 109
 
4.1.1 Introduction 109
 

About the author

DAVID HARTZELL is Steven D. Bell and Leonard W. Wood Distinguished Professor of Finance and Real Estate and Director, Wood Center for Real Estate Studies, University of North Carolina. He is a Fellow of the Private Equity Research Consortium, Kenan Institute and serves on the Board of Directors of Highwoods Properties, a publicly traded Real Estate Investment Trust (REIT), and has served on the Investment Advisory Committee of the $100 billion North Carolina Retirement System. ANDREW BAUM is Professor of Practice, Saïd Business School, University of Oxford and Professor Emeritus, University of Reading. He is Director of the Oxford Future of Real Estate Initiative, Chairman of Newcore Capital Management, and has held senior executive and non-executive positions with Grosvenor, The Crown Estate, CBRE Global Investors and others.

Product details

• Authors: Andrew E Baum, Andrew E. Baum, Baum Andrew E., David Hartzell, David (University of North Carolina) Bau Hartzell, Hartzell David
• Publisher: Wiley, John and Sons Ltd
• Languages: English
• Product format: Hardback
• Released: 26.11.2020
• EAN: 9781119526094
• ISBN: 978-1-119-52609-4
• No. of pages: 592
• Series: Wiley Finance; Wiley Finance Editions
• Subjects: Social sciences, law, business > Business > Business administration; Immobilien, Business & management, Property & real estate, Wirtschaft u. Management, Allg. Finanz- u. Anlagewesen, Finance & Investments, Finanz- u. Anlagewesen, Immobilien u. Grundbesitz