Real Estate Models - Asset Allocation & Forecasting
Real Estate Models
Real Estate Asset Allocation Model
The RES Asset Allocation Model offers an intuitive framework for real estate portfolio construction, complete with tailored risk considerations and supported by quarterly updates and client support. Fully customisable to your organisations’ requirements, the key benefits of the RES approach lie in its systematic evaluation of each driver of return (growth, vacancies, and costs). By stepping through each factor’s impact on portfolio risk and return, with clearly defining assumptions, the whole organisation gains an understanding of the sources of risk and return. With swift installation, your team can promptly integrate and utilise the model.
- Strategic Diversification: Gain a competitive edge by allocating your investments across different real estate sectors. Our model ensures that your portfolio is well-balanced, reducing vulnerability to market fluctuations and boosting potential risk-adjusted returns.
- House View-Driven Strategy: Effective portfolio construction must incorporate a forward-looking perspective to anticipate and adapt to evolving market trends and current pricing. Incorporate your House View in your portfolio plan to ensure that it is in line with your internal forecasts.
- Tailor to your Investment Objective: Customise your strategy to align with your client investment objectives. Our model is designed to be flexible, allowing you to customise allocations based on your risk tolerance, return objectives, and time horizon.
- Data-Driven, Transparent Insights: Leverage the power of our bottom-up cashflow model to project expected returns and volatility. Our model provides you with actionable insights based on historical trends and future projections.
- Alpha Integration: Incorporate alpha-driven strategies. Enhance portfolio construction by integrating superior stock selection and asset management skills.
- Customisable Market Segments: Fit your market view. Define and adjust your market segments to align with your investment strategy.
- Risk Management: Differentiate risk elements through a thorough risk management approach. Our model assesses risk factors and enables you to experiment with including and excluding properties within a portfolio.
- Simplified Decision-Making: concise and effective graphic summaries of your findings. Our Excel interface’s user-friendly presentation of complex data is straightforward and succinct.
Real Estate Forecasting Model
The RES Forecasting Model projects total return, capital growth, rental growth, and yield change estimates for 64 categories of the UK real estate market, allowing users to design economic scenarios and analyse their effects on market returns. Each quarter, Oxford Economics projections and the MSCI Quarterly Index are used to pre-populate the model.
Please note, you need to subscribe to MSCI Global Intel to use this service.
- Transparent econometric equations translate economic scenarios into projections for rental growth and yields.
- A cash flow engine simulates future net income receivable and capital values taking into account the timing of lease expiries, reversionary potential, over-renting, rent reviews, fixed uplifts and the letting of vacant units.
- The net income receivable and capital values are used to build all of the MSCI standard market performance measures.
- Deductions are made from income for letting costs, rent reviews fees and lease renewal fees and from capital returns for refurbishment costs/maintenance.
- RES econometric models of future rental growth and yield movements
- Replication of the structure of the MSCI Databank.
- MSCI market performance.
- Key economic data.
- Average propensity to renew, propensity to break and letting periods.
- Economic forecasts from Oxford Economics.
- Total return, income return, capital growth.
- Rental value growth.
- Equivalent and initial yields.