Profitability indicators in real estate development - an international investigation

Marianne Wyrwoll and Elisabeth Beusker

ERES from European Real Estate Society (ERES)

Abstract: Real estate development contains a broad field of activity. It includes the entire life cycle in the context of individual properties, at neighbourhood or regional level. The process is characterised by the interdisciplinary cooperation of a large number of actors from different professions. The economic viability of projects is of central importance within real estate development. This is measured on the basis of profitability indicators. They can be used to identify and control problems and to recognise opportunities and risks. The introduction of new regulations, but also current tax and market devel-opments indicate that using profitability indicators for early risk detection is becoming increasingly important. An examination of the currently available literature indicates a large number of profitability indicators in real estate development. The literature does not determine whether the application of the various indicators is related to the entrepreneurial structures and the professional background of the users. So far, the identification of the criteria for the respective choice of performance indicators or their respective contexts of application is missing. In the context of this study, we test the hypothesis that the choice of profitability indicators depends significantly on the professional background of the user as well as the corporate structure. Based on a literature study, key profitability indicators are collected. In order to identify profitability indicators, we develop an online questionnaire to collect data from international real estate development companies. As part of the evaluation, we investigate the choice of indicators applied in relation to the above-mentioned contexts. The aim is to gain insight into real estate developers' choice of profitability indicators and to reveal their decision-making processes.

Keywords: profitability indicators; Real Estate Development (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2023-01-01
New Economics Papers: this item is included in nep-ure
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