Course Outline

DAY ONE
REAL ESTATE: CHANGE AND CONTINUITY

Land and Evolving Asset Classes

• Key determinants of the real estate market (land, construction costs and planning)
• Land Banking, sub-division, development and investment
• Sectoral analysis of real estate
• Differences between geographical markets

CASE STUDY:
Comparing asset performance between development and investment across Australian and Asia-Pacific jurisdictions

Real Estate Sectors

• The rise of residential property
• The characteristics of successful retail in the age of online markets
• WFH and the office market
• Warehousing, industrial property and free zones
• Hospitality real estate after Covid
• Specialist sectors (student housing, government-related real estate, and others)
• Infrastructure real estate

CASE STUDY:
International comparisons of prices, yields and other key data

Evolving Developer and Investor Strategies

• Sectoral balance and long-term plans
• Smart Construction (robotics, 3D printing, drones and other new building techniques)
• Artificial Intelligence (AI) and real estate
• Solar and other renewable energy

CASE STUDY:
Interaction between renewable energy, ESG and post-covid development and investment

• Valuation and GIS software
• Land registration, conveyancing and the blockchain
• Marketing and sales applications

CASE STUDY:
Maximising return on marketing expenditure in current real estate markets

Risk Analysis

• Geoolitical risk and how to manage it
• Real estate performance in geopolitical crises
• Incorporating geopolitical risk into development and investment appraisal
• Risk consultancy and its value in recent conflicts

CASE STUDY:
Political risks in an Australian context
OR
CASE STUDY:
How risky is the Chinese real estate market?

• Economic cycles and their impact

CASE STUDY:
Conversions, greenfield developments and demand

• Climate change – effect on real estate
• Cultural and social issues

CASE STUDIES:
Successful and failed developments and investments

Residential Property

• Why buy residential real estate?
• Does rental income matter for residential property?
• Segmenting residential real estate
• Measurement criteria for residential real estate – hedonic approaches
• Main drivers of residential real estate pricing
• Qualitative issues, competition, style and marketing

CASE STUDY:
Style and value in the residential market in Australia
OR
CASE STUDY:
Style and value in the residential market in Singapore and Hong Kong compared

Market Analysis Considerations

• Comparables and how to analyse them
• Regression models and how they work
• Handling rapid changes in market conditions

EXERCISES:
Comparable analysis for accurate valuation

Property Analytics

• Gross and net income
• Differences in calculating NOI
• Overall capitalisation rate
• Capital expenditure issues
• Differences between property types
• Approaches to the cap rate
• Assessing Net Present Value (NPV) for properties
• Ratio Analysis and its value
• Land values in NPV
• The terminal value issue

EXERCISE:
NPV and IRR calculations for real estate

Forecasting

• Can real estate markets be accurately forecast?
• Methods of forecasting and their application

CASE STUDY:
Application of the Delphi Method to qualitative real estate forecasting

DAY TWO
FUNDING REAL ESTATE DEVELOPMENT AND INVESTMENT

Mortgages and Bank Finance

• Concepts and applicability of the mortgage

EXERCISES:
Calculating mortgages and impact on value

• Global statistics

CASE STUDY:
What has happened to developers profitability and strategy?

• Available types of mortgage
• Syndication and the mortgage market
• Lending practice and pitfalls
• Mezzanine finance and deal structuring

CASE STUDY:
How financial waterfalls work for real estate development

• Logic and use of Special Purpose Vehicles
• Joint venture finance and operations
• Relative returns for structured real estate finance
• Recent funding developments and tax structures

CASE STUDY:
Real Estate project finance – useful or not?

• How to model real estate finance
• Islamic finance for real estate

CASE STUDY:
Real estate investment and financing models

Cost of Capital Issues for Real Estate Companies

• Costs, taxes and inflation
• CAPM and corporate leverage (equity/asset betas)
• Capital budgeting and real estate

Financial Management Principles

• Accounting theory and methods
• Asset and liability valuations
• Development vs Investment property in IFRS
• Reporting procedures in the management of different kinds of properties
• Preparing profit-and-loss statements
• Tax implications; tax records
• Cash flows; depreciation; investment tax credits; after-tax cash flow;
• Presentation to clients and management of client’s accounts

GROUP EXERCISE:
Building and auditing an Excel financial model for a real estate investment or development

Managing Risks

• Modelling and evaluating comparative risks

CASE STUDY:
Managing real estate risk during a crisis

• Risk management strategies (including derivatives)
• Available risk management instruments
• Costs and benefits of risk management
• Modelling risk management (sensitivity, scenario and Monte Carlo)

EXERCISE:
Risk Analysis in Excel applied to the built mode

DAY THREE
REAL ESTATE FUNDS AND REITs

Measuring Property Performance

• Applicable concepts and methodologies
• Problems and issues with performance evaluation
• Sources of data
• Evolution of data measurement
• International comparisons of performance
• Current issues in performance measurement

CASE STUDY:
How do we measure real estate performance?

Investment Portfolio Analysis

• Comparison of risk–return profiles of real estate and financial investment assets
• Measuring investment performance
• Principles of portfolio diversification
• The case for active portfolio management
• Application of property within a larger non-property investment market.
• The nature of risk and return from property compared with bonds and equities.

CASE STUDIES:
portfolio management and property investment – how much property should a fund hold?

Ownership Vehicles

• Listed vs unlisted (private equity) property investment vehicles
• Investment funds, trusts and other legal and tax structures
• Government tax incentives during a crisis

CASE STUDY:
Comparing tax structures for property and funds in different market jurisdictions

• International property investment, diversification and portfolio management

CASE STUDY:
Risk profiles and investment in high-yield real estate debt

Securitisation of Real Estate

• Securitisation mechanics
• Sukuks and their relationship to securitisation
• Securitising mortgages
• The future of securitisation

Quoted Real Estate Investment Trusts (REITs)

• What is a REIT?
  Size and structure of the global REIT market
• Benefits and risks of REIT investment
• Comparison with direct and private equity investment
• Examples of new REIT sub-classes

CASE STUDY:
Prospects for the A-REIT market and its competitors
OR
CASE STUDY:
Prospects for the S-REIT market and its competitors

Course Conclusion