How do you analyse real estate?
I sort of know how to analyse listed companies, looking at the financials etc. I have never analysed real estate in any proper sense and as it stands I need to know, how do you big boys do it?
Commercial real estate, fully let with majority lease expiration in 2015. It currently 'yields' x% which is the rent divided by current price. It has one of the best 'high street' locations, it is slapbang in the centre.
The things I am considering are:
NPV treating it under scenarios eg as an annuity, an annuity with growth etc
Time frame
Status of the current tenants, eg their growth and the value they gain at the current address
Potential for the local real estate market to bottom out (it has experienced a boom since the 80s and hasn't had negative growth for more than 1 quarter, that is in the 30 or so years prices have never really faltered)
I'll update this as I think of things but that's what I'm considering at the moment. As I say, I'm new to commercial real estate!
Argus will be an easy way for you to model this unless you have your own templates.
Rent divided by current price does not = yield!
There are lot of factor which we need to analysis like-Land bank,Inventories,Customers deposits,Housing prices,Rental rates,Industry consolidation ,Macro economic factor.
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