Cookies and Privacy

The University uses cookies on this website to provide the best experience possible including delivering personalised content on this website, other websites and social media. By continuing to use the site you agree to this, or your can go to our cookie policy to learn more and manage your settings.

Advancing real estate decision making

Like in many industries, real estate professionals often function in an industry of known and unknowable risks. These can include anything from sudden changes in the economy to environmental disasters. This research aims to provide a framework to help managers navigate these risks. 

Real estate decisions large

Researchers

Research background

Whilst existing literature on real estate risk management focusses almost exclusively on holistic risk management techniques, documented increases in frequency and magnitude of unforeseen, rare and extreme events can throw up sudden, unexpected shocks that can challenge recognised real estate decision-making strategies. The research aims to discuss this issue and provide a conceptual real estate framework to manage these risk events.

Research aims

To advance real estate decision-making practice in this area, this research paper takes the skilfully conceptualised downside risk framework presented by Diebold et al. (2010), being the known (K), the unknown (u) and the unknowable (U) risk categories, to provide a blueprint for effective real estate decision making in a changing global environment.

Research methods

With the understanding of KuU risks in their theoretical perspective, a schematic classification was prepared with respect to empirical knowledge by means of the availability of existing literature; methodological knowledge with regard to the quantification by assigning probabilities; impact across the timeline; and, finally, the level of awareness.

Results

The mastery of modern real estate risk management can be better served by understanding and managing extreme downside risk events. Creating a comprehensive risk management framework can enhance comparative real estate performance whereby unprepared competitors fail in a world increasingly affected by large, highly improbable and unpredictable events.