Decision theory and real estate investment: an analysis of the decision-making processes of real estate investment fund managers

2001 ◽  
Vol 22 (7) ◽  
pp. 399-410 ◽  
Author(s):  
Nick French
Keyword(s):  
Decision Making ◽  
Real Estate ◽  
Decision Theory ◽  
Investment Fund ◽  
Real Estate Investment ◽  
Fund Managers ◽  
Decision Making Processes

scholarly journals The embeddedness of sustainability in real estate investment decision-making

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Cath Jackson ◽  
Allison Orr
Keyword(s):  
Decision Making ◽  
Real Estate ◽  
Investment Decision ◽  
Qualitative Approach ◽  
Real Estate Investment ◽  
Content Type ◽  
Potential Barriers ◽  
Fund Managers ◽  
Investment Decision Making ◽  
Barriers To Implementation

Purpose The importance of real estate’s sustainability rating has increased significantly. Studies undertaken in 2007 and 2016 show that, at acquisition, the rating rose from 7th to 3rd most important attribute. This shift in priorities parallels the RICS embracing the 10 principles of the UN Global Compact (RICS, 2015). However, while sustainability value premia appear common in some international markets, the picture is mixed and drivers and mechanisms lack empirical investigation. The literature reveals potential barriers to investors fulfilling both sustainability and financial objectives. The purpose of this study is explore these potential barriers. Design/methodology/approach Focus groups with real estate fund managers, sustainability managers and acquisitions surveyors are undertaken to explore the adoption and implementation of environmental sustainability policies. This reveals a series of barriers to implementation and these are then explored in greater depth through a series of interviews with fund managers. This layered, qualitative approach is designed to provide detailed knowledge of practical and conceptual sustainability issues within the UK real estate market. Findings Key drivers underpinning the adoption of sustainability policies are revealed and barriers to implementation are found to relate to data on investment performance, valuation methodologies and prohibitive capex. Further, the heterogeneous, opaque and slow-moving nature of the market is prohibitive and intervention is encouraged to overcome the lack of financial viability that hinders improvements. Originality/value Research is dominated by highly aggregated quantitative data on sustainability within commercial real estate markets. The qualitative approach used here adds new insights and value to the understanding of the embeddedness of sustainability in real estate investment decision-making.

The short-run dynamics of Australian real estate investment trusts and direct real estate at the subsector level

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
James Giannarelli ◽  
Piyush Tiwari
Keyword(s):  
Decision Making ◽  
Real Estate ◽  
Practical Significance ◽  
Market Forces ◽  
Real Estate Investment ◽  
Content Type ◽  
Commercial Property ◽  
Fund Managers ◽  
Short Run ◽  
Market Factors

PurposeThis paper examines the extent of the short-run relationship between Australian real estate investment trusts (A-REITs) and direct real estate returns on both a commercial property sector and a prime and secondary grade basis, i.e. a subsector basis.Design/methodology/approachTwo-step methodology is used. First, we identify the dynamic interdependencies between A-REITs and each commercial property subsector to determine whether the returns of A-REITs lead each subsector or vice versa. Second, short-run deviations between these asset returns are estimated by measuring their individual response behaviours to changes in key economic and financial market factors that are expected to influence these returns.FindingsResults suggest that each subsector shares a unique relationship to A-REITs, given each prime and secondary grade commercial property return series varies in behaviour. Some property subsector returns can be predicted by movements in A-REIT returns, whereas returns for others move independent to changes in A-REITs. Similarly, some subsectors commove with A-REITs in response to changes in certain market factors, whereas others diverge. As such, these findings have practical significance to fund managers and portfolio selection, as each commercial subsector embodies its own exposure to A-REITs and vulnerabilities to market forces. Subsectors that commove with A-REITs in response to certain market forces may be used as substitutes in a portfolio. Alternatively, subsectors that diverge from A-REITs in response to market forces may offer diversification benefits when combined.Practical implicationsThese findings extend beyond existing research to offer critical decision-making guidance at the acquisition level, as fund managers may more closely consider the impact that prime or secondary grade properties within a given commercial sector may have on a portfolio that consists of public and private Australian real estate. Ultimately, a more informed acquisition may be carried out as consideration of a property's asset grade allows for a deeper insight into the property's risk profile and its anticipated short-run impact on a portfolio.Originality/valueThis paper extends previous studies that focus mostly on aggregate or sector-level returns by measuring REIT and real estate dynamics at the subsector level, allowing for practical significance at not only the portfolio level but crucially at the acquisition level, a pivotal decision-making stage for fund managers. This is also the first paper to study REIT and real estate causality and response patterns to changes in market factors at the Australian sector level.

scholarly journals State-of-the-Art Prescriptive Criteria Weight Elicitation

2012 ◽  
Vol 2012 ◽  
pp. 1-24 ◽  
Author(s):  
Mona Riabacke ◽  
Mats Danielson ◽  
Love Ekenberg
Keyword(s):  
Decision Making ◽  
Decision Support ◽  
Decision Theory ◽  
Decision Analysis ◽  
Analytical Methods ◽  
State Of The Art ◽  
Criteria Weights ◽  
Decision Making Processes ◽  
Method Of Assessment ◽  
Descriptive Theories

Comparatively few of the vast amounts of decision analytical methods suggested have been widely spread in actual practice. Some approaches have nevertheless been more successful in this respect than others. Quantitative decision making has moved from the study of decision theory founded on a single criterion towards decision support for more realistic decision-making situations with multiple, often conflicting, criteria. Furthermore, the identified gap between normative and descriptive theories seems to suggest a shift to more prescriptive approaches. However, when decision analysis applications are used to aid prescriptive decision-making processes, additional demands are put on these applications to adapt to the users and the context. In particular, the issue of weight elicitation is crucial. There are several techniques for deriving criteria weights from preference statements. This is a cognitively demanding task, subject to different biases, and the elicited values can be heavily dependent on the method of assessment. There have been a number of methods suggested for assessing criteria weights, but these methods have properties which impact their applicability in practice. This paper provides a survey of state-of-the-art weight elicitation methods in a prescriptive setting.

scholarly journals Design, development, and public health

2018 ◽  
Vol 15 (1) ◽  
pp. 62-74
Author(s):  
Traci Rose Rider ◽  
Margaret Van Bakergem ◽  
Jinoh Park ◽  
Xi Wang ◽  
J. Aaron Hipp
Keyword(s):  
Public Health ◽  
Decision Making ◽  
Real Estate ◽  
Private Investment ◽  
Robert Wood Johnson Foundation ◽  
Design Development ◽  
Interview Protocol ◽  
Early Adopters ◽  
Standard Design ◽  
Decision Making Processes

As awareness of the built environment’s impact on individual and community health spreads through design and construction, different stakeholders are engaging in conversations of strategies and metrics. This paper explores the structure, methodology, and findings of research supported by the Robert Wood Johnson Foundation addressing how multifamily developers conceptualize, discuss and implement health strategies in their projects. Framed in a Critical Theory perspective, this research first explores the traditional multifamily development decision-making process, specifically targeting how early adopters in multifamily development are discussing health and wellness in their projects. By unpacking the discussions around health and wellbeing in design, real estate development, and public health, aligned concepts are identified to operationalize these concepts for further exploration. Using a comparative case study strategy addressing how and why (Yin 2017), five developers positioned as early adopters were engaged to better understand how they each conceptualize, implement and measure health strategies in their multifamily projects. Two-day in-depth interviews were held in two initial developers’ home offices, addressing their standard design and decision-making processes and evolving into specific consideration of various health strategies. Four additional developers were engaged either over the phone or in person. Interview protocol ensured that discussion topics were standardized at the outset, with the following topics addressed with each partner: (1) company mission, (2) organizational structure, (3) differentiation in the market, (4) company evaluation metrics, (5) assessment scales, (6) decision-making processes, (7) market trends, (8) use of evidence-based data, (9) internal health discussions, and (10) investor relationships. Cyclical data collection, transcription, and analysis allowed the interview protocol to be modified for emergent topics. Site visits, website analysis, and clicks through national online real estate databases also contributed to a holistic perspective of this complex problem. Findings indicate that multifamily developers are focusing on upfront, marketable strategies that are likely to foster mental and social health, but with little regard of applying any form of evaluative metrics. Rating systems addressing health are of little help. When asked directly about choices to influence the health of residents, participants heavily cited (1) location, emphasizing access to community amenities; (2) place making, for community building and social and mental wellbeing; and (3) physical fitness opportunities through fitness spaces. Even those developers viewed as early adopters are uncomfortable discussing health strategies using a public health lens. This research intends to highlight interdisciplinary conversations surrounding health in multifamily real estate, contributing to more rigorous adoption of health strategies in this challenging building type. These findings can be valuable to stakeholders in design, development, private investment, property management, public health, community design, and policy.   

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