This assignment is intended to expose you to a range of practical issues in property market
analysis. You will need to develop a clear understanding of:
• The way in which property markets work in general;
• The factors that influence investment decisions in property markets;
• The role of national, regional and local economic factors driving markets
• The inter-relationship between property markets and the economy;
• How investment decisions are made, including consideration of risk and return, benchmarking, portfolio theory and strategies.
You will then have to apply this knowledge to account for the specific characteristics of a property market(s) of your choice and the context (economic, institutional, etc) in which they operate.
The project is intended to:
• Analyse the economic and policy context in which property use and investment decisions are made in the location you have chosen;
• Identify investment opportunities and strategies in the property markets under study, with regard to wider portfolio contexts;
• Identify the key information you need to provide a basis for your investment advice
• Produce a professional assessment of the strength of the property markets and property investment conditions and prospects.
You are employed in the research/strategy team of an International Fund Management house. A product development plan is being prepared with a view to launching a £500m European balanced property fund in mid-2016, which will be ungeared and have a 100% allocation to direct property in Western and Central Europe outside the UK. This will be a closed ended fund with a lifetime of seven years and with a target of raising and committing capital to the fund over a 24 months period from mid-2016.
Your contribution to the development plan is to prepare a strategy with regard to:
• The preferred markets (locations) at the city level.
• The future weightings across sectors in these markets.
• The likely levels of total return you might expect from the markets and sectors you have chosen.
Central European markets are defined here as Poland, the Czech Republic and Hungary.
The exercise is about process and the rationale for investing in markets and sectors. There is no ideal weighting which you will be benchmarked against but you will be scored on the basis of how you reach your decision and your research approach. Your work needs to include an assessment of current market conditions and prospects and you will need to consider specific opportunities/threats and overall risk to returns where appropriate. The economic and property market factors you consider in your deliberations clearly need to cover the required seven year time horizon of the fund. Where forecast data doesn’t stretch that far you will need to make assumptions as necessary. In your considerations you should propose where and when you would commit funding over the first 24 months of the fund and how that might impact on returns.
The approach will include a study of secondary material including property market reports, professional and academic journals, newspapers, government reports and statistics (especially for economic data) for the chosen market (s).
Depending on location and sector (s) chosen, you may in addition have an opportunity to collect information from the Real Estate Service Providers. Your findings should include both quantitative analysis of market activity and qualitative assessments of market conditions. Quantitative evidence might include local, regional and national economic data, rents and yields, vacancy rates, development activity, etc. Qualitative material might include the pattern of land and property use, the quality and form of buildings and locations, planning policy, regeneration schemes and any other factors you consider relevant. It is important that you consider and discuss what you expect to happen to the market, and why, as this is a key component that you will need in order to justify your recommendations.
Your report should contain an executive summary and the report should be a maximum of 2,500 words, and have fully referenced supporting material.
As a starting point, you may find some of the research published by real estate service providers useful (JLL and CBRE are a good starting point) as well as research material published by investment houses. The IP&E site is also a good source of research material in Europe. Research material including JLL and RCA global and European Trends reports will be available on Vision. Historic data is available from the IPD multi-national index.
You are a portfolio manager and you are required to invest 500 Million Euro, the region of choice is Wester and Central Europe, excluding UK.
you need to decide what specific country and city you would invest in and why and what asset class you would invest in specifically. you need to allocate the amount accordingly as well. Moreover a macroeconomic and micro economic analysis needs to to be on the country and city chosen.
The paper needs to 2500 words
Tables and graphs are not counted.
Extra information can be adjusted in the Appendix.
You need to use academic Journals/reports from advisories like JLL and CBRE.