Exploring application contexts of profitability indicators in real estate development

Marianne Wyrwoll and Elisabeth Beusker

ERES from European Real Estate Society (ERES)

Abstract: A multitude of profitability indicators are at the disposal of the construction and property industry for the purpose of evaluating the profitability of construction projects. These indicators offer a comprehensive overview, enabling the synthesis of important information. Nevertheless, the application of profitability indicators also results in the compression of data, potentially leading to the loss of crucial information. The failure to consider prospective developments in property development decisions can incur substantial risks. As part of the research, profitability indicators were analysed with regard to their application contexts in real estate development. A total of 249 real estate developers in Germany were surveyed on the use of profitability indicators in the project business. In addition, data was collected on the respective companies, on the employees responsible for the application of the indicators, and on the specific projects. Overall, 63 profitability indicators were identified. The findings indicate that the application of indicators is not solely based on their target orientation, but that alternative factors also influence the application of profitability indicators. The objective of this study is twofold: firstly, to ascertain the application of these indicators in the context of real estate development, and secondly, to identify inaccuracies in the application.

Keywords: application context; profitability indicators; Real Estate Development (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2025-01-01
New Economics Papers: this item is included in nep-ppm
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2025_164

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