Real estate portfolio management model
Author: PhD Student Veneta Markovska (University of national and world economy - Sofia)
Keywords: real estate, financial modeling, Monte Carlo, risk analysis, real options
This paper presents a model for real estate portfolio management that is built upon unique features of real estate assets and the market they trade on. Main focus of the suggested model is set on three major ways of real estate investment direct, indirect through real estate investment trusts and funds, and by using real estate based derivatives. This study is based on specifying common financial indicators and research methods, namely using modified Value At Risk (mVaR) for core portfolio risk measure, and at the same time developing special stages, benchmarks and management milestones for different real estate investment vehicles. Providing a dynamic and flexible method for quantitative study has been achieved by integrating Monte Carlo simulation and real options analysis into portfolio management model. As a result it is possible to achieve not only higher accuracy of quantitative research but also to integrate strategic decisions and goals into portfolio management processes.
