The Economics of Speculative Construction Development

You work for an advisory firm that is commissioned by a large pension fund to assess the potential of investing in Ealing Broadway Shopping Centre. You are to present a written report outlining the business case to the investor for or against investing in the development.

You should use the knowledge you have acquired from this module, the materials provided on Moodle regarding this commercial property and also conduct online search to collect further information and data on the project where needed. 

1) The report should include (but not necessarily be restricted to):

a) Description of the site: the proposed commercial scheme and the business model.

b) Investigate past planning permission from Ealing Council.

c) Evaluation of property-specific risks and local risks. Furthermore, evaluate risks arising from the current economic/financial situation and/or any other market risks. 

d) Analysis of the current owners of the property and their incentive to sell the asset. What may be the asking price if they were to sell the asset and how does it compare to similar investment opportunities? 

e) Why would this particular property be a good investment for a large UK pension fund and why would it not be?

2) Your report should start with an executive summary of no more than 200 words. You may want to underpin your report with academic literature related to commercial real estate investing. The top academic journals in the field are Real Estate Economics and Journal of Real Estate Finance and Economics. Your conclusions should clearly state whether the investor should consider or not acquiring the property and why.

Please refer to the Course Guide for the generic Term Paper assessment criteria. 

Please note:

o You cannot obtain credit twice for the same work. Therefore you should ensure that your report does not plagiarise your own work (directly or indirectly) submitted for any other module.

o You are expected to prepare the report individually but you may, of course, freely exchange factual information and work in groups.

o Please indicate the title of each table and graph and place the source of the information under the table/graph. 

o TurnitIn detects text that has been directly copied from other sources and highlights those sections. Make sure that you express text in your own words and where there is a similarity, the source of the information should clearly be indicated.