Analysis of Different Dimensions for Property Allocation Process within Real Estate Investment Companies

University essay from KTH/Fastigheter och byggande


Property companies are offering a range of financial vehicles (indirect investments) which enable investors to participate in cash-flows of voluminous properties or real estate portfolios. Effective indirect real estate investments generally consist of three main components, which ought to be synchronized:

Demands of investors - property characteristics - investment vehicle

However, in practice this synchronization (allocation process) turns out to be way more complex and sophisticated. The question regarding the utilization of properties within real estate investment companies is embedded in superordinate dimensions like the overall corporate strategy, which is in turn embedded in an overall economical and political environment.

The purpose of the thesis at hand is to give some insights what factors and dimensions should be considered in order to implement a thoughtful allocation process. The author bases his qualitative analysis on his work experiences in two major German property companies. In this connection the author conducted several interviews with employees of different departments (e.g. Corporate Development, Controlling). Furthermore, the author´s purpose is to transfer the complex practical approach into a well-structured and clearly organized framework which presents the most important dimensions and factors and in turn have an impact on the allocation process. The thesis concludes with an outlook for the overall German economy and in particular the market for indirect real estate investments which will be followed by an emphasis of the most important factors regarding company´s property allocation process in the near future.

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