Abstract
This paper presents an innovative model for property portfolio assessment based on the concept of a growth-share matrix. The proposed real estate portfolio matrix uses two primary qualities of properties: their potential to accrue value over the holding period and their ability to generate stable positive cash flows. The aim of the model is to utilise these two dimensions in the assessment of the qualities of individual properties and to identify their subsets to meet preferences of different groups of real estate investors. The concept was developed to provide companies with strategic advice on how to optimise the sales strategy of their non-core property assets. This method can be applied successfully to both commercial and residential properties. The concept is subsequently utilised for the purpose of post-hoc structural analysis of the Polish commercial real estate market. Transaction analysis accentuates the prevalence of core assets in terms of both transaction volume and value. Value-added assets constitute a much smaller market segment but may nevertheless present a good opportunity for portfolio diversification. Speculative assets appear to be scarce, which is characteristic of the current phase of real estate market conjuncture.
Highlights
In today’s turbulent economies and dynamically changing real estate market conditions, making effective and strategically viable property investment decisions has become very difficult
This paper introduces a novel tool—the real estate portfolio matrix (REPO-M)— designed to facilitate the structural analysis of real estate portfolios and, subsequently, tailor investment strategies suitable for various types of investors
Exemplifying the application of REPO-M, we perform transactional analysis of the Polish commercial real estate market and demonstrate how REPO-M may be used as an analytical instrument for market research
Summary
In today’s turbulent economies and dynamically changing real estate market conditions, making effective and strategically viable property investment decisions has become very difficult. Analysts and executives are seeking ways to optimise a company’s investment or divestment strategies in accordance with predefined strategic requirements and preferences This is challenging for corporate entities that have a large property portfolio but do not ordinarily invest in real estate as part of their core business activity. The broad group of market professionals comprises large institutional capital investors who are mainly interested in high-value core properties that generate stable cash flows, whose value can be maintained or improved over a long period, and for which effective debt financing strategies and cost effectiveness are the heart of the business (Ooi, 2007) Typical examples of such properties include office buildings in central business districts, industrial properties, and retail centres. Exemplifying the application of REPO-M, we perform transactional analysis of the Polish commercial real estate market and demonstrate how REPO-M may be used as an analytical instrument for market research
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