Multivariate Analysis of the Condition of the Property Development Sector: Selected Local Real Estate Markets in the European Union

Iwona Forys,Malgorzata Tarczynska-Luniewska

doi:10.1007/s11294-018-9665-0

Iwona Forys, Malgorzata Tarczynska-Luniewska

Open Access

https://doi.org/10.1007/s11294-018-9665-0

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Abstract

The aim of the study is to serve as a multidimensional analysis of relationships between the economic and financial standing of property developers and the residential property market situation. The discussion concerns the property development market situation in the context of the construction market situation, with particular emphasis on residential housing investment in selected EU countries. Property development companies whose activities focused on residential housing were assessed with respect to performance in the selected market on the stock exchange. Individual companies were classified using economic and financial indices. Despite the ongoing economic downturn in real estate markets, the results for these companies did not indicate poor performance on the stock exchange. In the study, a synthetic measure of development was used in linear ordering.

Highlights

The economic downturn in the real estate market in Europe, as on other continents, began in the second quarter of 2008
As shown by the recent global crisis, the real estate market is an important segment of the economy because it both affects and is affected by the financial sector
The aim of this study is to evaluate selected local real estate focusing on the socioeconomic potential of housing markets and property development companies listed on the local stock exchange

Summary

Introduction

The economic downturn in the real estate market in Europe, as on other continents, began in the second quarter of 2008. The result of globalization and transnational economic systems It was the result of the emergence of multinational corporations, whose scope covered a number of countries on all continents. As shown by the recent global crisis, the real estate market is an important segment of the economy because it both affects and is affected by the financial sector. It is the crisis in the financial markets, defined as episodes of rapid changes in the financial markets, connected with deficiency of liquidity or insolvency of market participants, that caused the global economic crisis in 2008 (Bordo et al 2000). The dynamic development of modern financing instruments, conditioning debt repayment on the ability to enter into new commitments (refinancing) or a low level of investors’ equity involvement in the real estate market, connected the discussed financial crisis with the real estate market (Minsky 1986)

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