Cash Flow Valuation in Real Estate Development Projects with Decision Tree Analysis
MEGARON, cilt.8, sa.3, ss.149-164, 2013 (ESCI, TRDizin)
- Yayın Türü: Makale / Tam Makale
- Cilt numarası: 8 Sayı: 3
- Basım Tarihi: 2013
- Doi Numarası: 10.5505/megaron.2013.46855
- Dergi Adı: MEGARON
- Derginin Tarandığı İndeksler: Emerging Sources Citation Index (ESCI), TR DİZİN (ULAKBİM)
- Sayfa Sayıları: ss.149-164
- Açık Arşiv Koleksiyonu: AVESİS Açık Erişim Koleksiyonu
- Yıldız Teknik Üniversitesi Adresli: Evet
Özet
With the rapid development of real estate markets under globalization and competitive market conditions, risk evaluation has been one of the most important tasks in the process of real estate investment valuation. This paper describes the relationship between construction permit uncertainties and real estate development projects using decision tree analysis (DTA). The expected value (EV) criterion for a proposed office development project is incorporated into a conventional discounted cash flow (DCF) analysis determined by DTA. This will help utility function to come closer to the real world, so that decision making and risk analysis can be done based on more realistic data, providing better information for investors. The results are consistent with the results calculated by conventional DCF analysis. However, research demonstrates that the application of DTA obviates the deficiencies of conventional DCF analysis regarding construction permit delays and scheduling uncertainties. Results also emphasize the importance of applying EV and DTA, as construction permit delays generate a significant change in NPV of real estate development projects.