Elective Course
REV703 – Advanced Valuation
Course Unit Code: REV703
Type Of Unit: Elective for Valuation Specialization
Level of Course Unit: Second cycle
Year of Study: First year
Semester: Third Semester
Number of ECTS Credits: 7.5
Mode of Delivery
Face to Face
Prerequisites
Students must have successfully completed the foundational course Principles of Property Valuation.
Course Objectives
The aim of this course is to delve into advanced valuation methodologies and provide real estate professionals with a robust toolkit for navigating complex property markets, making sound investment decisions, negotiating deals, and mitigating risks.
Students gain a comprehensive understanding of property valuation and risk management, starting with specialised property appraisal techniques, understanding valuation errors and risks, forecasting methods, quantitative approaches to valuing residential properties and market indices (hedonic models), and methods for predicting future values and constructing automated valuation models.
The second part focuses on the impact of leverage on investment returns, techniques for valuing real estate options, financing strategies and capital structuring, and advanced data analysis skills for making evidence-based investment decisions.
Learning Outcomes
- Development of special types of property valuations
- Measurement and evaluation of the precision of property valuations.
- The use of hedonic models in residential property and index construction.
- Forecasting of rents and capital values for the valuation of property
- The usage and construction of automated valuation models (CAMA)
- The role of risk and leverage in real estate investment
Course Content
1. Valuations for land and property taxation
2. Valuations for Expropriation
3. Valuation volatility and risk
4. Hedonic indices
5. Forecasting of rents – theory
6. Forecasting of rents – application
7. Automated Valuation Models
8. AVM construction
9. Leverage and Risk in Real Estate
10. Financial Options
11. Real Options and Valuation
12. Introduction to Financial Risk Management
Course Features
Planned learning activities and teaching methods
Lectures; in-class discussion and debates; in-class exercises; problem sets; teamwork; video case studies, team presentations, interactive online learning via Moodle (quizzes, assignments, forums)
– Case Studies and Project Work:
– Analyzing real-world case studies involving complex valuation scenarios, risk management decisions, and financing strategies.
– Conducting a capstone project applying advanced valuation techniques, options analysis, and regression modeling to a real estate investment opportunity.
– Guest Lectures and Industry Speakers:
– Inviting real estate professionals, valuation experts, lenders, and risk managers to share insights and best practices.
– Networking opportunities with industry practitioners to understand real-world applications of course concepts.
Assessment methods and criteria
Class participation: 10%
Assignments/Projects: 50%
Final Examination: 40%
Readings
Textbooks:
1. Wyatt P., Property Valuation, Third Edition, Wiley 2023.
2. “Real Estate Finance & Investments” by William B. Brueggeman and Jeffrey D. Fisher
3. “Real Estate Market Analysis: Methods and Applications” by David M. Geltner and Norman G. Miller
4. “Real Estate Development: Principles and Process” by Mike E. Miles, Laurence M. Netherton, and Adrienne Schmitz
5. “Real Options Analysis: Tools and Techniques for Valuing Strategic Investments and Decisions” by Johnathan Mun
6. “Real Estate Investment: A Strategic Approach” by Andrew Baum and David Mackmin
Optional Textbooks:
1. “Real Estate Finance & Investments: Risks and Opportunities” by Peter Linneman
2. “The Income Approach to Property Valuation” by Andrew Baum and Nick Nunnington
3. “Real Estate Investment Analysis and Valuation” by David M. Geltner and Norman G. Miller
4. “Real Estate Market Analysis: Methods and Case Studies” by Deborah L. Brett and Adrienne Schmitz
5. “Statistics for Business and Economics” by Paul Newbold, William L. Carlson, and Betty Thorne
Students can choose from the required texts for core knowledge and optionally explore additional resources for deeper understanding and practical applications.
Journal Articles:
1. Real Estate Forecasting, Indices and AVM
– Hendershott, P., MacGregor, B. and White, Ν. (2002) Explaining Real Commercial Rents Using an Error Correction Model with Panel Data, Journal of Real Estate Finance and Economics, 24:1/2, 59-87.
– Mouzakis, F. and Richards, D. (2007) Panel Data Modelling of Prime Office Rents: A Study of 12 Major European Markets, Journal of Property Research, 24(1), 31-53, March.
– Glumac P. & Des Rosiers F. (2018) Real estate and land property automated valuation systems:A taxonomy and conceptual model,, LISER working papers, n° 2018-09, April.
– Rossini P. & Kershaw P. (2008) Automated Valuation Model Accuracy: Some Empirical Testing, 14 th Pacific Rim Real Estate Society Conference, stana Hotel, Kuala Lumpur , January.
2. Risk Management:
– Real Estate Risk and Return Expectations: The Views of Investors by Colin Lizieri and Andrew Baum (Journal of Property Research)
– Managing Real Estate Risk and Capital by Peter Linneman (The Journal of Portfolio Management)
– Market Risk in Commercial Real Estate Markets by E. Geoffrey Turnbull and C.F. Sirmans (Journal of Real Estate Finance and Economics)
3. Leverage and Options Valuation:
– Real Estate Leverage: A Case Study of the Use of Mortgage Debt in Portfolio by Charles W. Smithson and C.F. Sirmans (Journal of Real Estate Finance and Economics)
– The Impact of Leverage on Real Estate Risk and Return by Peter Linneman (Real Estate Finance)
– Real Options and Investment Decision Making by Lenos Trigeorgis (Harvard Business Review)
– The Option to Delay and Real Estate Investment Decisions by David Geltner and Richard de Neufville (Real Estate Economics)
– Valuing Real Estate Options: A Practitioner’s Guide by Michael J. Sullivan (Journal of Property Investment & Finance)
English (UK) 
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