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How to analyse multiple investment opportunities

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Investment in Office property in Australia during 2013 has been strong and is expected to continue in 2014. The strong investment activity in real estate during 2013 has also been seen in many countries across the globe.

When making strategic investment decisions it is important to be able to compare the cashflows and performance indicators for different investments in a common format.  
When comparing investments it is important to be able to review the gross, net and effective rental achieved as they can vary significantly depending on the level of incentives offered. As an example, the table below reflects research undertaken by Savills1 for the Sydney office market which identified wide variations in the level of rents achieved and capital values.

Table 1 - Savills Quarterly Office Market Report, Quarter 4 213
Savills Table

Having reporting systems in place which clearly show the cashflow and performance indicators for your existing portfolio are important both for analysing existing and future investment opportunities. Comparing the yields and Internal Rate of Return (IRR) for all investment options gives a good basis of comparison when combined with Net Present Value (NPV). As the investor it is important to understand where you investments sit in the range of returns for a given market. There is also a need to benchmark your investments against industry averages and benchmarks for similar property types. Understanding the remaining lease duration for an investment is also important and this is commonly referred to as the Weighted Average Lease Expiry (WALE).

Given the number of variables involved in the analysis of Office investments, it has become increasingly important to have software which makes the comparison of investment options clear and accurate. Specialised property analysis software can calculate the effective rents, IRRs and WALEs quickly and can be updated easily making the assessment of current and future investments a straight forward process.

Estate Master Investment Appraisal (IA) is one of the leading software solutions for the analysis of investment property and provides a platform for clear analysis of investments in a common format.

Please join us on Tuesday 25/2/14 for a user webinar discussing the use of Estate Master IA including cashflow analysis and performance indicators.
Book it in your diary now>

1 http://pdf.savills.asia/asia-pacific-research/australian-research/australia-office-/savillsresearch-quarter-times-sydney-office-q4-2013.pdf

Date Published: 25 Feb 2014
Category: User Group Tutorials

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