This book is dedicated to real estate scholastic work, in advancing
the greater understanding of real estate investment analysis. This is
because there has been limited research in bringing out clearly the
uncertainty or risk, which is quantifiable uncertainty in real estate
market analysis. Even real estate market research, which is carried
out as an industry practice among private real estate researches, is
no exception. Another reason is that it has been widely accepted
that while the financial revolution has substantially changed many
sectors of the financial industry, it has made little impact on real
estate development and investment practice as Ill as scholastic work.
Furthermore, while it is readily acknowledged that despite its huge
share in the world Ialth, real estate investment discipline and research
is on the whole still a poorly researched subject area.
As a result, the industry tends to be dominated by traditional
real estate analysts with little understanding of real estate market
uncertainty and capital markets. These commentators are widely
regarded to spend too much time worrying about local space supply
and demand conditions, while totally losing sight of the everchanging
real estate market and capital market conditions.
The theme of this book is real estate investment analysis
of direct and indirect real, which in turn can be appropriately
managed under economic theory and the theoretical conceptions
of real estate finance, provided the uncertainty is quantifiable.
The book deploys case studies involving Singapore and Asia. This
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framework enables real estate market analysis to attempt what
defines the Asian direct and indirect real estate sectors; what is
being measured; how it behaves (in terms of price and non-price
factors); how it is structured and how it effectively achieves the
objectives of sustainable total returns and manageable real estate
Managing real estate market uncertainty optimally is achieved
at the portfolio level through real estate asset allocation. This is
important because the real estate portfolio is able to virtually
eliminate the unique (i.e. specific) uncertainties among the various
Asian real estate sectors; thus retaining within the portfolio only
the systemic (i.e. market-wide) uncertainty. Apart from real
estate asset allocation, the alternative and modern approach to
risk management at the portfolio level, is the value-at-risk (VaR)
approach. Another modern and important alternative to coping
with uncertainty is real option analysis and pricing that help to
better define real estate market uncertainty in extent and time.
Real option analysis and pricing also represent uncertainty via a
decision tree and the risk-neutral probability conception, in order
to comprehend how uncertainty impacts on the value of real estate
investment decisions. The pricing of uncertainty is based on the
risk-free hedge security conception. These are best examined at
the micro level of the investment in a real estate development
opportunity on vacant land.
Nevertheless, the real estate sectors in Singapore and Asia offer
promising prospects since the Asian currency crisis of 1997. It is now
timely to take stock and make an assessment of how the sectors would
pan out for the future, Ill into at least rest the next century.
I are very pleased to present our thinking and research in
international real estate with particular emphasis on Asia. The
region’s vast potential for real estate is itself a large incentive for
international real estate research and education that has inspired me
to document the significant work I have done over the years.
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I wish all readers a pleasurable reading of this book, and I thank
you sincerely for your support without which the publication of this
book would be made all the more difficult.
Dr HO, Kim Hin / David
(University of Hertfordshire, UK)
(International Real Estate & Public Policy)