Profitability indicators

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Real estate developers have a large number of key figures and research methods at their disposal for examining the profitability of investments. It is of great importance to consider adequate key figures when making investment decisions. Considerable consequential damage can occur if investment decisions are made without a sufficient profitability analysis. If future developments are not sufficiently considered in real estate investment decisions, this implies high risks. The real estate industry is constantly subject to new construction and legal-regulatory framework conditions, economic developments and market uncertainties. Such developments and events have a significant influence on the profitability of construction projects.

Within the framework of the research work, the real estate economic indicators that are usually used in theory and practice for forecasting and evaluating investments in the context of real estate developments are examined with regard to their application contexts, framework conditions, practical suitability and their optimal applicability.

The work is based on a two-stage model. On the basis of a theoretical investigation of relevant profitability ratios, an empirical investigation of their application contexts and practicality is carried out. A comparison of both approaches is intended to reveal flawed fields of application as well as optimisation potentials in economic efficiency studies.

Editor: Marianne Wyrwoll, M.Sc. RWTH