The main aim of this thesis is to design a new and more advanced methodology for valuation of real estate portfolios and incorporate uncertainty into the valuation process. From the comprehensive real estate literature we identified the main value drivers whose treatment is often neglected in the traditional appraisal methodology as they are used as a single point estimates. The identified parameters are the discount rate, inflation, prime rent, occupancy and market capital value changes. In contrast with the traditional approach, we calibrate distributions of these parameters from historical data and allow their variation through the Monte Carlo simulation. This enables us to model their impact on the market value of our real estate portfolio, which comprises of A-class office buildings with detailed property level data including their lease structure. The methodology presented here builds on the widely used DCF approach, which is augmented by the risk parameters and through the thousands of iterations of the Monte Carlo simulation we arrive to a distribution of all potential values of the portfolio. Finally, the knowledge of relevant risk factors and their impact on returns of their property portfolio then provides investors with better and more reliable foundations for their decisions and...

Households generally have little or no possibility to unload their real estate risk, which constitutes a large part of  their total portfolio risk. The aim of this study is to analyze a way for households to unload this risk through a socalled index-linked mortgage financed by a fund. The study examines how such a mortgage could be structured, and how it will affect  he bank, the borrower and the fund investor compared to a conventional mortgage. The ominal loan value and therefore also the interest payments of the studied index-linked  ortgage will vary according to the HOX Flats Stockholm Index. Through linear optimization, the structure is optimized from a borrower’s perspective but is subject to a set of constraints on the bank’s and the fund’s profitability and risk levels. The optimal structure is tested through a scenario analysis for different outcomes of apartment price developments and also  hrough a sensitivity analysis to test the effect of shifting conventional mortgage rates. The esults show that the interest rate payment burden will consistently be lower for the index-linked mortgage than for the conventional mortgage. The borrower is insured against house price drops but have to give up some of the upside potential on the property investment if house prices increase. The fund gets a satisfactory payoff in relation to the real estate  arket movement while it is somewhat protected when house prices decline. The bank issuing the mortgages will always experience a profit, but the conventional mortgage is more profitable  or negative index scenarios. Furthermore, the probability of default decreases for the index- inked mortgage holder when prices drop as the loan to value ratio (LTV) always remains  elow 100 percent for index decreases up to 40 percent. The structure is appropriate for  owincome households who will have difficulties paying back the loan when apartment prices  rops. This study contributes to theory in hedging of real estate risk, mortgage risk and  inancial innovation. / Hushåll har generellt få möjligheter att försäkra sig mot husprisrisk som idag utgör en stor del av hushållens totala portföljrisk. Denna studie undersöker en möjlighet för hushåll att försäkra sig mot sådan risk genom ett så kallat index-länkat bolån som finansieras genom en fond. Studien kontrollerar hur ett index-länkat lån kan struktureras och hur det påverkar banken, låntagaren och fondinvesteraren i jämförelse med ett traditionellt bolån. Lånets nominella värde och därmed även räntebetalningarna som är kopplade till lånet varierar enligt förändringar i HOX Flats Stockholm Index. Lånestrukturen optimerats genom linjär optimering med hänsyn till låntagarens lönsamhet och med bivillkor på bankens och fondens risktagande respektive lönsamhet. Den optimerade strukturen testas genom scenarioanalys för olika utfall av lägenhetsprisutveckling samt genom en känslighetsanalys av den  raditionella bolåneräntan. Resultaten visar att den månatliga betalningsbördan för räntebetalningarna alltid kommer att vara lägre för hushåll som håller ett index-länkade bolånet än för de som innehar ett vanligt lån. Det index-länkade lånet innebär att bolånetagare får ge upp en viss del av vinsten då bostadspriser stiger i förhållande till ett vanligt bolån men ger ett skydd mot förluster vid en nedgång i bostadspriser. Fonden visar sig kunna ge en god avkastning i relation till indexets utveckling och ger ett visst skydd mot fall i bostadsmarknaden. Banken som ger ut indexlänkade bolån kommer alltid att gå med vinst, dock är vanliga bolån mer lönsamma vid nedgång i huspriser. Fortsättningsvis minskar risken att ”defaulta” för hushåll med det index-länkade bolånet då huspriser faller eftersom strukturen innebär ett loan to value ratio (LTV) under 100 procent upp till en prisnedgång på 40 procent. Resultatet visar att index-länkade lån passar låginkomsttagare och hushåll som ommer att ha svårt att betala tillbaka sitt lån om bostadspriserna faller. Studien bidrar till teori inom husprisriskförsäkring samt till teori inom finansiell innovation

Real estate investments are more frequently crossing borders. The national cultural differences, which are influencing investment preferences and decision processes, are challenging Real Estate Companies, whereas not only capital, but also individuals are moving more frequently across country borders. Real Estate Companies’ risk profile concerning uncertainty avoidance, regarding real  estate investments haven’t  been studied before, thus a gap in the literature is identified. This study aims to identify risks, risk management tools, uncertainty avoidance in Real Estate Companies with different national cultural background, helping to develop a deeper understanding of the differences in their risk profiles. I have found that the Israeli respondents are highly uncertainty avoiding and risk loving, but only regarding familiar risks, while concerning unfamiliar risks, they are rather risk averse. The Swedish respondents are weakly uncertainty avoiding and risk neutral, no matter known or unknown ris

The diploma thesis "Real estates as an investment instrument" is focused on direct investments into real estates. There is a brief description how to invest into the real estate in general point of view, in the first chapter. Basic terms related to real estates are defined and described here as well as influencing factors. The next section consists of different types of analyses dealing with measuring investments with the help of "the magic triangle" yield, liability and liquidity. In order to provide a full range of understanding, an analytical example is also introduced. The last part of the thesis involves a comparison of investment into real estates and other investment instruments. Finally, property analysis with portfolio diversification and an anti-inflationary investment is run. The main objective of this thesis is to introduce a compact view at one of investment possibilities -- investment into real estates.