MMP321 Lecture Notes - Lecture 1: Corelogic, Sensitivity Analysis, Aust

• School: Deakin University
• Department: Business and Law
• Course: MMP321
• Professor: Adrian

Document Summary

Topic 1 - real estate as an investment class & forecasting property. Investment objectives can be divided into two parts: growth: relatively long time horizon with no immediate need for the investment funds. Asset capital growth (i. e. capital gains) etc: accumulation phase, usually higher risk, income: short term horizon and on-going need to use the cash generated from the investment. Dividends (reits (real estate investment trusts) or rent from direct property etc. yield phase, usually lower risk. E. g. very hard for an individual to buy a shopping centre and get financing for it. Low with cash & fixed int. moderate with equities. Why invest in real estate: diversification weak correlation of returns to equities (stocks). Expanding economy strong forecast gdp higher share prices. Property, often with cash flows locked in medium to long term leases, doesn"t benefit in the short term, and investors find property investments less attractive relative to shares. (e. g. during tech booms)