Real Estate Analysis and Investor Presentation

Click here to load reader

download Real Estate Analysis                and  Investor Presentation

of 37

  • date post

    25-Feb-2016
  • Category

    Documents

  • view

    34
  • download

    2

Embed Size (px)

description

Real Estate Analysis and Investor Presentation. Table of Contents. Executive Summary Basic Fundamentals Apartment Fundamentals Office Fundamentals Retail Fundamentals. Executive Summary. - PowerPoint PPT Presentation

Transcript of Real Estate Analysis and Investor Presentation

  • Real Estate Analysis and Investor Presentation

  • Table of ContentsExecutive SummaryBasic FundamentalsApartment FundamentalsOffice FundamentalsRetail Fundamentals

  • Executive SummaryThe objective of this presentation is to analyze the various cities in terms of their attractiveness to real estate investment.The 3 main real estate product types analyzed are rental apartments, office and retail.First the cities are classified based on basic real estate fundamentals like migration, cost of living, employment growth and population growth.Then the cities are classified based on specific fundamentals for each of the 3 product types.A cross analysis of various factors are used to achieve efficient analysis.

    Executive SummaryBasic FundamentalsApartment FundamentalsOffice FundamentalsRetail Fundamentals

  • Basic FundamentalsMigration & Cost of LivingEmployment & Population growth

  • Basic Fundamentals

    1) Migration & Cost of Living Migration of people in to a city/metro can have stellar impact on the economy of that area. In particular it has a deep impact on real estate.Therefore, migration trends of a city/area can be considered as a very important factor in determining the demand trends for various types of real estate space. Another factor which is worthy of being included in the analysis is the cost of living, which is one of the major factors influencing people to migrate in to a particular city. Executive SummaryBasic FundamentalsApartment FundamentalsOffice FundamentalsRetail Fundamentals

  • Cities with high incoming migration Executive SummaryBasic FundamentalsApartment FundamentalsOffice FundamentalsRetail FundamentalsPhoenix has the highest incoming migration with an average of 93400 for the last 5 years.

  • Cities with low cost of living Executive SummaryBasic FundamentalsApartment FundamentalsOffice FundamentalsRetail FundamentalsThe living cost index for these 5 cities are almost the same, with Cleveland topping the list with 87. Note that US is taken as the base 100.

  • StrongWeak1) Both incoming migration number and cost of living index favorable2) Attractive markets for real estate investment based on these 2 factors1) Incoming migration is low, but cost of living index favorable2) Markets weak, because these cities are not able to attract people1) Though incoming migration is high, cost of living index is not favorable2) Solid markets because, it is able to attract large number of people, though cost of living is high1) Both incoming migration number and cost of living index unfavorable2) Unattractive markets because both factors are not in favourExplanation StrongSolidWeakDisaster

  • Migration & Cost of LivingSolid87147260093400-88200Living cost indexMigration 123451234512Strong1.Phoenix2.Atlanta3.Dallas4.Orleans5.Houston1.Inland Empire2. San Jose1.Pittsburg2.Chicago3.Cleveland4.Detroit5.New York1.San Diego2.Long Island3. San Francisco4.Orange County5.Los Angeles54321WeakDisaster117

  • Attractiveness matrix Phoenix Based on incoming migration and cost of living the attractiveness of cities are plotted.Attracts the highest incoming migrationAttracts high incoming migration & cost of living lower than phoenixAttracts people in to the city due to low living cost Attracts people due to low living costBoth factors quiet favorableCityScoreFactorsLowHighLowHighLowHighLowHighLowHighAtlantaDallasNew OrleansHouston

  • 2) Employment & Population growthEmployment growth in a particular city is a crucial factor in determining the demand for real estate in that city. It is crucial for demand creation in all types of real estate products like single family homes, apartments, office & retail. Similarly population growth, in a city is also considered as a crucial factor in determining the demand trends for real estate. Increase in population leads to increase in demand for housing, and increase in public utilities and it also leads to increase in consumer businesses. Executive SummaryBasic FundamentalsApartment FundamentalsOffice FundamentalsRetail Fundamentals

  • Cities with higher employment growth Executive SummaryBasic FundamentalsApartment FundamentalsOffice FundamentalsRetail FundamentalsAverage deviation=[(avg employment growth last 5 years- national avg)+ (avg projected growth next 5 years-national avg)]/2

  • Cities with higher population growth Executive SummaryBasic FundamentalsApartment FundamentalsOffice FundamentalsRetail FundamentalsAverage deviation=[(avg population growth last 5 years- national avg)+ (avg projected growth next 5 years-national avg)]/2

  • 1) Though employment growth is high, population growth is low 2) Solid markets as they are able to generate high employment growth leading to higher per capita income1) Both employment growth and population growth is low2) Unattractive markets as these cities are neither able to generate employment growth nor population growth1) Both employment growth and population growth is high2) Attractive markets for real estate investment1) Employment growth is low, but population growth is high2) Markets weak as lack of employment growth leads to lack of increase in per capita incomeExplanation SolidStrongDisasterWeak

  • DisasterWeakSolidStrong

    Employment & Population growth-3.00%2.45%-0.28%-0.05%2.15%-2.25%Population growthEmployment growth 123451.Ft Lauderdale2.Honolulu1.Boston2.Pittsburgh3.Cleveland4.Detroit5.New Orleans1.Columbus2.Memphis3. Chicago4.San Jose5.East Bay1.Las Vegas2.Austin3.Orlando4.Raleigh5. Phoenix121234512345

  • Attractiveness matrix Las Vegas Based on employment growth and population growth the attractiveness of cities are plotted.Generates the highest employment and population growthGenerates 2nd highest employment & population growthEmployment growth & population growth favorablePopulation growth second highest and 4th highest employment growth5th highest in both factorsCityScoreFactors LowHighLowHighLowHighLowHighLowHighAustinOrlandoRaleighPhoenix

  • Apartment Fundamentals

  • Apartment fundamentalsFor the creation of new demand for apartments for rent, a very important factor is the percentage of population in the age group (20-34), who are most likely to rent apartments for living, than buy/own a house. Also in addition to this factor, another factor that shall be considered is forecasted vacancy rate for the next 5 years (2008-2012). Using a cross analysis we can classify cities in to different categories. Executive SummaryBasic FundamentalsApartment FundamentalsOffice FundamentalsRetail Fundamentals

  • Cities with high % of population in 20-34 age groupExecutive SummaryBasic FundamentalsApartment FundamentalsOffice FundamentalsRetail FundamentalsAustin has the highest % of population in the apartment dwelling age group of 20-34

  • Cities with low forecasted vacancy rates-apartmentExecutive SummaryBasic FundamentalsApartment FundamentalsOffice FundamentalsRetail FundamentalsSan Francisco has the lowest average forecasted vacancy rate for apartments over next 5 years

  • 1) Population %in 20-34 age group is high and avg forecasted vacancy rate for apartments for next 5 years is low 2) Attractive markets for investment in rental apartments as people in 20-34 are most likely to rent apartments and vacancy rate is also favorable1) Population % in 20-34 age group is low, but forecasted vacancy rate is low2) Solid markets as low vacancy rate forecasted means there is no oversupply1) Both population % in 20-34 and forecasted vacancy rate is high2) Markets considered weak, because, though the population % in apartment dwelling age group is high, high vacancy rates implies oversupply situation1) Population % in 20-34 age group is low and forecasted vacancy rate is also low2) Unattractive markets, because both the factors are unfavorableExplanation StrongWeakSolidDisaster

  • SolidStrong

    Population in 20-34 age group & forecasted apartment vacancy rate

    3.56%11.62%7.59%2125.816.1Avg forecasted vacancy ratePopulation % (20-34) StrongWeakSolidDisaster123451.Salt Lake City2.Inland Empire1.Austin2. Raleigh1.Boston2.San Jose3.Orange County4.San Francisco5.New Jersey1.Charlotte2.Jacksonville3.Hartford4.Tampa5.Stamford3. Atlanta4. Houston5. San Antonio3.San Diego4.Columbus5.Sacramento124351234512345WeakDisaster

  • Attractiveness matrix Salt Lake City Based on population in age group 20-34 and growth and forecasted vacancy rate for apartments the attractiveness of cities are plotted.Has very high % of population in 20-34 and vacancy forecast also favorableHas a high % of population in 20-34 and vacancy rate slightly above Salt Lake CityThough % of population is low compared to top 2 cities vacancy rate is lowerPopulation % in 20-34 almost similar to San Diego but vacancy slightly highBoth factors favorableCityScoreFactorsLowHighLowHighLowHighLowHighLowHighInland EmpireSan DiegoColumbusSacramento

  • Office Fundamentals

  • Office fundamentalsTwo of the most important factors determining the space for office demand in a particular market is the percentage of office using employment in that market and the forecasted annual growth.While the existing share of office using employment determines the base for new demand, the growth in office using employment is the factor which determines the growth in demand or new demand.Executive SummaryBasic FundamentalsApartment FundamentalsOffice FundamentalsRetail Fundamentals

  • Office using employmentExecutive SummaryBasic FundamentalsApartment FundamentalsOffice FundamentalsRetail FundamentalsWashington has the highest office using employment % at 43.7%, followed by San Francisco and New York.

  • Office using e