Course Number 1684
Professor of Mgt Practice Arthur I. Segel
Fall; Q1Q2; 3 credits
For students seeking a career in developing, or investing in real estate in emerging markets domestically and/or internationally. The course is for those students who are aware of the potential and the opportunity for investment returns in markets that are often perceived as too risky and/or too poor to generate either short-term or long-term profits.
- How to assess market context;
- How to distinguish between perceived risk and real risk;
- How to understand the role of the public sector;
- Howto reduce energy risk; and
- How to mitigate overall development risk including regional and project risk.
Content and Organization
Conceptual Framework: The course is divided into seven modules with special emphasis on international real estate.
The first module covers the analytic framework for real property development and investing, market analysis, the elements of joint ventures and partnerships, and basic financial analysis. Students will also gain an introduction to the general vocabulary of the business.
The second module examines each of the main commercial property types (office, hotel, industrial, retail, multifamily), including their general characteristics, market analyses and metrics used in evaluating and operating each of these asset types, and particular risks or opportunities with respect to these types of projects and buildings.
The third module reviews capital markets including private equity syndications and deal making, mortgages and real estate investment trusts (REITs). Examples illustrating the development process continue to be used throughout this and other modules to highlight both real estate development issues and choice of capital structure.
The fourth module is a special discussion of valuation techniques used for different property types as well as a discussion of institutional portfolio analysis and investing.
The fifth module focuses on negotiations and will include discussions on buying and selling assets, distressed properties, and debt.
The sixth module covers real estate development. Discussions will cover development in emerging markets, entrepreneurial projects, construction management, and development regulation and approvals.
The final module discusses important trends in the industry including sustainability, novel asset classes, globalization and opportunities in emerging markets, affordable housing, and infrastructure.
Real estate lends itself to case method teaching as virtually every subject requires quantitative and qualitative analysis, judgment calls, and development of a practical action plan. "Cold calling" is a frequent and important component of class.
There are at least three graded homework assignments and a final exam. Most homework assignments are required to be completed in groups. Additionally, polls will be used frequently and are considered an important aspect of class participation.
Textbook readings supplement the cases, while additional, optional books and readings are suggested for more exposure to theoretical concepts. Mini-lectures and a considerable number of technical notes are used throughout the course along with a tool-kit with materials for future use. The workload and preparation is above average for HBS EC courses. Students seeking advanced real estate modeling on Excel and ARGUS can attend optional afternoon classroom sessions. However, these skills will not be necessary for the Real Property coursework.