| Abstract [eng] |
The main purpose of the thesis is to find answers regarding some of the fundamental questions in investing in real estate. The first consideration is whether one should invest in real estate or not, and if so, under what circumstances. In order to answer these questions investors can conduct an analysis on a standalone basis or compare the performance of different investment vehicles. The main body of the text is divided in the following way. First, the special characteristics of investing in real estate are presented by which I am setting the tone for the rest of the study. This section is followed by macroeconomic considerations that one should keep in mind when entering the real estate market. At this point of reading it is already possible to identify many of the advantages and disadvantages of investing in real estate. Further, I elaborate on research methdology and methods before moving on to results analysis. Throughout my literature review I have discovered many insightful studies in the area. In my collection of the most relevant ones, I focused on the risk and return aspects of investing in real estate. On the one hand, the scientific literature is abundant in terms of comparative analysis, including stocks and bonds. On the other hand, standalone analyses are not so common. Within the results analysis part of the thesis, I am sequencing the information from real estate valuation to profitability analysis while building on the results of the literature review. The result is tool for analyzing real estate deals from scratch. In terms of methodology I used a realist research approach. The whole exercise is done in a structured manner that builds on preconceptions in order to form a clear conceptual framework. The selected research method is twofold: qualitative and quantitative. The whole study resonates well with fundamental (pure) research methods but has practical implications and applicability. My findings and results focus on the risk and return characteristics and overall profitability of real estate investing. The practical part of the study can serve as a tool analyze real estate deals. |
