Predicted property investment returns: risk and growth models

Abstract

Purpose

The purpose of this paper is to discuss the principal measures of performance used in property and other investment types. In particular, the briefing will explore the relationship of the expected IRR with the initial return, highlighting the role of growth in the investment dynamic.

Design/methodology/approach

This education briefing is an overview of investment growth models with worked examples.

Findings

The analysis of property growth models is akin to the Fisher and Gordon growth models used in other finance markets.

Practical implications

This comparison of the models can work for all forms of investment. Similarly, instead of looking at the overall return as the measure of comparison (expected vs required), it is possible to work backwards and deduce market expectations and compare these with the investors view on those variables.

Originality/value

This is a review of existing models.

Citation

French, N. (2019), "Predicted property investment returns: risk and growth models", Journal of Property Investment & Finance, Vol. 37 No. 6, pp. 580-588. https://doi.org/10.1108/JPIF-07-2019-0096