Overall, McGreal et al. (2009) find that UK property market dominates the high-risk portfolios, while the US property market does not appear in high-risk portfolios for any of the three property types. In addition, institutional investors can get benefits from diversifying the international real estate portfolios, and they take the office property as one of the most popular types of real estate investment. In this research, the role of office property in the private real estate portfolios is uncertain. However, this study contributes evidence to the literature that diversification advantages do exist across international property markets – in this case, US and UK real estate markets. In a similar way, McGreal et al. (2006) model office and retail real estate portfolios under different risk levels by analysing income and capital appreciation returns separately, and take account of the data limitation, thereby choosing main ten regional centres within the United Kingdom and Ireland to examine diversification strategies of real estate investments. This study applies three different levels of return (low, medium, and high) for office and retail property across ten cities to build optimal portfolios for investors. The authors emphasise that income and capital appreciation returns perform significantly different in regards to risks: income returns involve lower risk while capital appreciation carries relatively higher risk and more volatile for institutional investors. Furthermore, the authors argue that a regional centre performs significantly better than other regions in generating investment returns.
Lee and Byrne (1998) use annual Keycentres data in the United Kingdom and apply a mean absolute deviation portfolio approach (MAD) to investigate whether portfolio diversification is better by region, sector or by functional group. In addition, the authors emphasise that applying Modern Portfolio theory to construct real estate portfolios is a relatively more rational approach, since it offers a top-down thinking direction for investors: first, to decide the share of each category of asset that assigned to the portfolio; second, to optimize the allocation within each category. This research considers three main types of property (retail, industrial, and office) and classifies regions into three types (standard, super, and functional) based on economic standards. After comparing the classification performance, they find that diversification through a super region performs better than any other strategies. However, Seiler et al. (1999) states that in reality most institutional investors choose diversification by property type. Although these two studies have different opinions, they both behind the similar idea that is to maximize the variety between portfolios, while to maximize the similarity within a portfolio.
The chart above paints a solid picture of the five-number summary, mean, mode, range, and standard deviation for the 40-gulf view condominiums sampled for our analysis. When looking at our analysis of golf view condominiums we can see that a large price range exists with one unit selling for $189,000 on the low end and another selling for $935,100 on the high end with an average selling price of $606,590. Gulf view condominiums have a range of 276 days on the market with units selling in as little as 22 days and others taking as long 298 days. According to the Interquartile Range Rule for...
Despite the widely available access to real estate listings, many believe that MLS databases continue to offer the most complete and accurate source of real estate information. Most MLSs now distribute content to other Web sites (primarily operated by real estate agents). An excellent starting point for MLS originated content is the national NAR Web site, realtor.com, which is also the most popular web site for searching real estate listings. Virtually all local and regional MLSs have an agreement with realtor.com to display much of their active listing inventory.
There are many factors you will need to know before you attempt to sell a home in Calicut. You should know the ways the real estate market can work for you and against you. This will not be hard to do as a lot of information about a sell house in Calicut process can be found online. One thing that is important for you to keep in mind about being a seller in Calicut is making the right financial decision.
The Authors studied why valuation estimates are likely to be biased estimates of market values due to clients' influence. The studies were done on the behaviors of clients in the UK, USA, and New Zealand. The authors pointed out that the information found has made a significant contribution to real estate literature, but the purpose of this research was to examine the prevalence of client influence and the impact on valuation in Nigeria. The survey found that nearly 80 percent of estate surveyors and valuers claimed some knowledge of client influence—mostly from private individuals. It did not state whether the clients were successful in influencing the surveyors and valuers to alter the valuation of their properties.
Dimensional's value strategies are based on the Fama/French research in multifactor portfolios designed to capture the return premiums associated with high book-to-market (BtM) ratios.
Markets have a big impact on the economy of any country. In the United Kingdom, one of the main markets that effects its economy is the housing market. According to FTI Consulting LLP (“FTI”) (2012) housing is of intrinsic importance to the economy and society. Housing has a dual role as: a human need, through its functional use as somewhere to live and the influence of its attributes on people’s well-being; and an asset, given that for many it is a long term investment which represents a large proportion of their wealth. The housing market is divided into two main types, the first type of housing market is known as the rental market where tenants rent properties from landlords (Anderton, 2008). The second type of housing market is the owner-occupied market where people buy a property in order to live in it (ibid). In recent years, several non-price factors have led to the increase of property prices in the United Kingdom. These factors are subcategorized into non-price factors of demand and supply. According to Anderton in Economics (2008) “demand is the quantity of goods and services that will be bought at any given price over a period
Contrariwise, portfolios with domestic and international equities provides considerable reduction of systematic risk, as assets from different economies present low correlation (Kristof, 2013; Redhead, 2008). Nonetheless, with growing globalisation, economies are increasingly becoming more interconnected, resulting in higher correlations/interactions among different financial markets. Therefore, the solution might be the partly domestic investment combined with assets from both emerging and developed economies (Armstrong,
Each step of the appraisal process involves an unknown amount of estimation error. The combination of these errors is unlikely to produce a perfect, error-free estimate of value. Thus, appraisal error is virtually unavoidable. Investors need reasonable estimates of value when buying, selling, or retaining commercial property, so an unknown amount of appraisal error adds uncertainty to the decision-making process. Despite the uncertainty, investors have learned to make allowances for appraisal error in their decision-making processes. The way in which real estate investors interpret appraisal errors has a material effect upon the decisions that they make. In particular, the predominant belief among real estate professionals is that appraisal error is random. This belief materially influences investor attitudes toward portfolio management and the valuation process itself. Lack of understanding of the relative magnitudes of random and nonrandom components of total appraisal error has consequences for optimal portfolio strategies. For example, investors who deem the bulk of total appraisal error to be random may reasonably conclude that error in estimates is beyond their control or influence. To minimize total portfolio valuation error, such investors may assemble large, diverse portfolios even though the cost of owning an array of properties of various types and in various locations is expensive. On the other hand, if the bulk of total appraisal error is nonrandom, investors would do better to pay attention to improving value estimates on each property rather than hoping that the errors in values of a large pool of properties will offset one another. In particular, investors should institute valuation controls and procedures to minimize the errors in each valuation of individual portfolio assets. Such controls might include obtaining multiple simultaneous estimates, changing appraisers for each periodic revaluation, or increasing the frequency of valuations. This conclusion becomes particularly significant in light of studies like Miles that determine that the typical magnitude of total appraisal error is about ten percent of appraised value. Information in three recent empirical studies provides evidence that previous appraisal research has been mistaken in assuming most appraisal error to be random. The demonstration that most appraisal error is nonrandom should encourage real estate investors to focus additional attention on individual asset selection and valuation at the expense of portfolio assembly.
The following essay will expand on the usefulness and flaws of CAPM and other asset evaluation frameworks and in the end showing that despite all the evidence against CAPM it is still a useful model for determining asset investments.
According to Investopedia (Asset Allocation Definition, 2013), asset allocation is an investment strategy that aims to balance risk and reward by distributing a portfolio’s assets according to an individual’s goals, risk tolerance and investment horizon. There are three main asset classes: equities, fixed-income, cash and cash equivalents; but they all have different levels of risk and return. A prudent investor should be careful in allocating each asset class to his portfolio. Proper asset allocation is a highly debatable subject and is not designed equally for everybody, but is rather based on the desires and needs of the individual investor. This paper discusses the importance of asset allocation, the differences and the proper diversification within the portfolio.
In the two weeks before trading, I watched several stocks on Yahoo Finance, gaining information from colleagues, and researching the Internet for possible options. I started by typing in random tickers into Yahoo’s search bar. Then, I would look at the fifty-two week range. If the current price was closer to the lowest price in the past year, I would look at the five year chart to see how each stock fared. Once I saw there was a decent profit margin, I made note of the stock to purchase on MarketWatch Virtual Stock Exchange when it opened on January 28th. In addition, some of my fellow classmates advised me on stocks, in which, they received a great return from. Since I learned never to trust web sites and people when it came to the stock market, I know I should double check by looking at charts, financial statements, and past history before making a decision on whether or not to purchase a corporation’s stock. Moreover, search engines such as Google aided in the search for stocks. I looked up the best stocks to buy, and what stocks are increasing in price. Although this tactic was not very helpful, I did gain some valuable information from penny stocks. Even though the minimum stock price on MarketWatch is two dollars, I found a couple that were over the entry amount. Overall, I believe I was well prepared to enter this investment game with complete confidence.
In order to understand the concept of financialization and the housing market on the global and local level, one must know that there is a global pool of money that is simply the worlds savings bank. In 2000 the pool had $36 trillion and has since doubled in size (Blumberg 2008). Its most recent profit increase was a result of developing countries and cities such as India, Abu Dhabi, and China making money. This doubled the cash pool available for investments, but left fewer solid investments for the taking. The solution was residential mortgages and the US housing market. The investment managers thought the low-risk high-return investment in the housing market was a good, stable idea. The glo...
When prices increase, the quantity decrease (Graph 1) and new firms enter the market in order to make economic profits. However this does not mean the real estate agents or brokers earn more money. On the contrary, the prices they charge may increase, but the number of houses each sell do not change (Goolsbee, 2005, Online). From this it is evident that the price of products in the real estate market is not affected by the entry of new firms.
Introduction Real estate is a fixed, tangible and immovable asset in the form of houses or commercial property (Seldin & Richard 1985). Real estate market involves developing, renting, selling/purchasing and renovating of these assets (houses). Market participants include developers (contractors, engineers, and so on), facilitators (mortgage companies, real estate brokers, banks, management agents and so on), owners, renters (leasers) and renovators (Seldin & Richard 1985). Like other economic markets, real estate markets have internal and external forces that impact the market (Seldin & Richard 1985). Demand and supply forces have the major impact on the industry as they determine growth or decline in the market (Seldin & Richard 1985).
The Modern portfolio theory {MPT}, "proposes how rational investors will use diversification to optimize their portfolios, and how an asset should be priced given its risk relative to the market as a whole. The basic concepts of the theory are the efficient frontier, Capital Asset Pricing Model and beta coefficient, the Capital Market Line and the Securities Market Line. MPT models the return of an asset as a random variable and a portfolio as a weighted combination of assets; the return of a portfolio is thus also a random variable and consequently has an expected value and a variance.