A platform for research: civil engineering, architecture and urbanism
A platform for research: civil engineering, architecture and urbanism
Sustainability and risk in real estate investments: combining monte carlo simulation and dcf
This paper identifies the relative contribution of sustainability criteria to property value risk. We use a discounted cash flow (DCF) model to assess the effect of a given set of 42 sustainability sub-indicators on property value. The anticipated demand for each sustainability sub-indicator is described by four future states of nature. Their impact on costs and/or revenue is estimated and included in the model. Subjective probability distributions describe the occurrence of the future states of nature. Monte Carlo simulations of the DCF model are then used to estimate the impact of an individual feature on the risk (volatility) of the property value distribution. Our results for Switzerland show that 'use of thermal energy' (29.3%), followed by 'access to public transportation' (16.3%), 'day light' (9.6%) and 'story height' (6.3%) have the highest single on property value risk. The results are used for a risk-based weighting of a sustainability rating. The rating illustrates how sustainability criteria affect the risk of specific properties and is used as a basis for real estate investment decisions.
Sustainability and risk in real estate investments: combining monte carlo simulation and dcf
This paper identifies the relative contribution of sustainability criteria to property value risk. We use a discounted cash flow (DCF) model to assess the effect of a given set of 42 sustainability sub-indicators on property value. The anticipated demand for each sustainability sub-indicator is described by four future states of nature. Their impact on costs and/or revenue is estimated and included in the model. Subjective probability distributions describe the occurrence of the future states of nature. Monte Carlo simulations of the DCF model are then used to estimate the impact of an individual feature on the risk (volatility) of the property value distribution. Our results for Switzerland show that 'use of thermal energy' (29.3%), followed by 'access to public transportation' (16.3%), 'day light' (9.6%) and 'story height' (6.3%) have the highest single on property value risk. The results are used for a risk-based weighting of a sustainability rating. The rating illustrates how sustainability criteria affect the risk of specific properties and is used as a basis for real estate investment decisions.
Sustainability and risk in real estate investments: combining monte carlo simulation and dcf
Meins, Erika (author) / Sager, Daniel (author)
2013-06-01
doi:10.5167/uzh-84897
Meins, Erika; Sager, Daniel (2013). Sustainability and risk in real estate investments: combining monte carlo simulation and dcf. CCRS Working Paper Series 01/13, University of Zurich.
Paper
Electronic Resource
English
DDC:
690
Sustainability and risk Combining Monte Carlo simulation and DCF for Swiss residential buildings
| BASE | 2015
Value of Commercial Real Estate investments: Sustainability perspective in Sweden and France
| BASE | 2014
Survey: Real estate investments doubled in 1993
Online Contents | 1994