A portfolio selection problem arising from real-estate investments.
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| Title: | A portfolio selection problem arising from real-estate investments. |
|---|---|
| Authors: | Butler, S.1, Searle, K. D.2 kitsearle@gmail.com, Malan, P. C.1 |
| Source: | Orion. 2023, Vol. 39 Issue 2, p159-178. 20p. |
| Subjects: | Real property, Net present value, Valuation of real property, Decision making, Time perspective |
| Abstract: | Investments have been used as a medium to mitigate the effects of inflation for many years and it is expected that they will be used for many years to come. Not only do investments allow for an opportunity to increase the net worth of a sum of money, they also allow for a source of passive income. With every investment, however, there is an associated risk but, higher risks are typically associated with a more enticing reward. From the broad scope of potential investment opportunities, the primary focus of this paper is to consider investments within the realm of real estate. Although property investments have the potential of generating a satisfactory return and may generally be considered a safe investment, as with any investment, poor decision making may still results in the loss of capital. A multi-period portfolio selection model may assist a potential investor in determining an optimal investment plan. The multi-period portfolio selection model considers the future value and rental incomes of a set of potential properties, in determining the optimal investment plan over a given time horizon, aimed at maximising the expected net present value of the portfolio. The quality of the investment plan, however, is dependent on the accuracy of the predicted future value and rental income of the properties under consideration. Therefore, in order to determine these future values accurately, a time series forecasting model is proposed. The forecasting model predicts the values for property values and rental income over a selected time horizon, which serves as input to the multiperiod portfolio selection model. In short, the goal of this paper is to apply suitable time series forecasting methods in order to generate predicted values with an acceptable accuracy, to serve as input for a multi-period portfolio selection model to determine an optimal investment plan as output. [ABSTRACT FROM AUTHOR] |
| Copyright of Orion is the property of Operations Research Society of South Africa and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.) | |
| Database: | Engineering Source |
| FullText | Links: – Type: pdflink Text: Availability: 0 |
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| Header | DbId: egs DbLabel: Engineering Source An: 175738439 AccessLevel: 6 PubType: Academic Journal PubTypeId: academicJournal PreciseRelevancyScore: 0 |
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| Items | – Name: Title Label: Title Group: Ti Data: A portfolio selection problem arising from real-estate investments. – Name: Author Label: Authors Group: Au Data: <searchLink fieldCode="AR" term="%22Butler%2C+S%2E%22">Butler, S.</searchLink><relatesTo>1</relatesTo><br /><searchLink fieldCode="AR" term="%22Searle%2C+K%2E+D%2E%22">Searle, K. D.</searchLink><relatesTo>2</relatesTo><i> kitsearle@gmail.com</i><br /><searchLink fieldCode="AR" term="%22Malan%2C+P%2E+C%2E%22">Malan, P. C.</searchLink><relatesTo>1</relatesTo> – Name: TitleSource Label: Source Group: Src Data: <searchLink fieldCode="JN" term="%22Orion%22">Orion</searchLink>. 2023, Vol. 39 Issue 2, p159-178. 20p. – Name: Subject Label: Subjects Group: Su Data: <searchLink fieldCode="DE" term="%22Real+property%22">Real property</searchLink><br /><searchLink fieldCode="DE" term="%22Net+present+value%22">Net present value</searchLink><br /><searchLink fieldCode="DE" term="%22Valuation+of+real+property%22">Valuation of real property</searchLink><br /><searchLink fieldCode="DE" term="%22Decision+making%22">Decision making</searchLink><br /><searchLink fieldCode="DE" term="%22Time+perspective%22">Time perspective</searchLink> – Name: Abstract Label: Abstract Group: Ab Data: Investments have been used as a medium to mitigate the effects of inflation for many years and it is expected that they will be used for many years to come. Not only do investments allow for an opportunity to increase the net worth of a sum of money, they also allow for a source of passive income. With every investment, however, there is an associated risk but, higher risks are typically associated with a more enticing reward. From the broad scope of potential investment opportunities, the primary focus of this paper is to consider investments within the realm of real estate. Although property investments have the potential of generating a satisfactory return and may generally be considered a safe investment, as with any investment, poor decision making may still results in the loss of capital. A multi-period portfolio selection model may assist a potential investor in determining an optimal investment plan. The multi-period portfolio selection model considers the future value and rental incomes of a set of potential properties, in determining the optimal investment plan over a given time horizon, aimed at maximising the expected net present value of the portfolio. The quality of the investment plan, however, is dependent on the accuracy of the predicted future value and rental income of the properties under consideration. Therefore, in order to determine these future values accurately, a time series forecasting model is proposed. The forecasting model predicts the values for property values and rental income over a selected time horizon, which serves as input to the multiperiod portfolio selection model. In short, the goal of this paper is to apply suitable time series forecasting methods in order to generate predicted values with an acceptable accuracy, to serve as input for a multi-period portfolio selection model to determine an optimal investment plan as output. [ABSTRACT FROM AUTHOR] – Name: AbstractSuppliedCopyright Label: Group: Ab Data: <i>Copyright of Orion is the property of Operations Research Society of South Africa and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract.</i> (Copyright applies to all Abstracts.) |
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| RecordInfo | BibRecord: BibEntity: Identifiers: – Type: doi Value: 10.5784/39-2-001 Languages: – Code: eng Text: English PhysicalDescription: Pagination: PageCount: 20 StartPage: 159 Subjects: – SubjectFull: Real property Type: general – SubjectFull: Net present value Type: general – SubjectFull: Valuation of real property Type: general – SubjectFull: Decision making Type: general – SubjectFull: Time perspective Type: general Titles: – TitleFull: A portfolio selection problem arising from real-estate investments. Type: main BibRelationships: HasContributorRelationships: – PersonEntity: Name: NameFull: Butler, S. – PersonEntity: Name: NameFull: Searle, K. D. – PersonEntity: Name: NameFull: Malan, P. C. IsPartOfRelationships: – BibEntity: Dates: – D: 01 M: 07 Text: 2023 Type: published Y: 2023 Identifiers: – Type: issn-print Value: 0259191X Numbering: – Type: volume Value: 39 – Type: issue Value: 2 Titles: – TitleFull: Orion Type: main |
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