Global Real Estate Markets

The Global Real Estate Markets course will provide enrollees with a global comparative view of real estate investment fundamentals. We will cover the main drivers of real estate values across countries and their forecast. Attendees will learn to underwrite real estate prices by studying the key determinants of construction costs and the value of land and location. From the macroeconomic perspective, attendees to this class will obtain an understanding of how changes in financial markets, international capital inflows, the local cost of capital, and changes in trade deficit or surplus affect current and future real estate markets. 

Special attention will be devoted to provide the skills needed to distinguish between short-term speculative fluctuations in real estate and actual or expected changes in asset valuation that are driven by fundamentals. We will analyze the micro-economic determinants of real estate value and rental yields and current global trends in real estate demand and valuation.

We will also examine the key institutional differences between markets that matter for valuation, investment, and policy purposes. Some countries have more developed and transparent investable markets, but there are opportunities in less conventional approaches. We will review some of the strategies taken by successful global operators in order to minimize currency, credit, and operational risks.

We will finally turn our attention to skills required to successfully build a global real estate portfolio. We will analyze the international returns and covariances of asset and asset-backed financial derivatives, and develop portfolio-optimizing strategies. We will also cover the universe of global Real Estate Investment Trust and Mortgage Backed Security markets.

This course has been approved for 16 CPD credits toward renewal of the CoreNet Global MCR designation.

Certificate of Completion from MIT Professional Education

• Learn the fundamentals of valuation in international real estate investment
• Identify key institutional features relevant for global real estate investors
• Learn how to understand and minimize global real estate risks
• Identify international investment opportunities
• Acquire portfolio investment skills in global real estate products

Program Outline

This course runs 9:00 am – 4:30 pm on the first day and 9:00 am – 4:00 pm on the second day. Please note all times are US Eastern Daylight Time. Schedule is subject to change.

Day One:

9:00–10:00 a.m. Review the relative pricing in global markets, land values and construction costs, and what are determinants of regional construction costs
10:00–12:00 p.m. Study the impact of foreign capitals on local real estate markets, rental yields: determinants, macroeconomic conditions and real estate pricing.
12:00–1:00 p.m. Lunch break
1:00–2:30 p.m. Review Commodities trade and real estate prices, as well as look at forecasting of real estate values in a country/region. 
2:30–3:30 p.m. Commercial Real Estate Products: Characteristics and differences across countries, as well as look at residential real estate: characteristics and differences across the markets
3:30–4:30 p.m. Look at leverage in real estate investments: Macroeconomic determinants, also look at the comparative financial markets: depth and regulatory environment

Day Two:

9:00–10:30 a.m. Discuss different ownership structures across countries, the institutional differences and their impact on real estate business, transparency and depth of investable markets, as well as due diligence and local relationships
10:30–12:00 p.m. Learn about currency risk and hedging, and comparative risk analysis: country and asset-country risk, portfolio approach: variances and covariances across countries in asset markets, international real estate trusts (REIT).
12:00–1:00 p.m. Lunch break
1:00–2:15 p.m. Country Presentations
2:15-2:30 p.m. Break
2:30-4:00 p.m. Case Study

Links & Resources

At the Intersection of Real Estate and Urban Economics: Albert Saiz leads research efforts looking at what's really going on in real estate and urban housing markets. ILP Institute Insider, October 2014

This course is applicable to a wide range of professionals across the real estate, banking, finance/investment, and insurance industries. Specifically, the course may be of interest to fund managers, investment portfolio managers, financial advisors, investment bankers, fixed-income analysts, financial risk managers, global financial market specialists, and professionals working in macroeconomic policy. More generally, this class can be valuable to anyone dealing with global financial markets and real estate investments.

Requirements

Laptops or tablets are required as course materials will be distributed electronically.