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Apr 24, 2024
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CAE 4811 - Real Estate Development Economics3 lecture hours 0 lab hours 3 credits
Course Description
This course introduces financial and economic concepts that confront construction managers, engineers, and other construction design professionals. The student is taught their role in pre-development analysis along with the basic principles of real estate investment. Students gain insight into the economic factors that motivate the client to build. Topics include financing the construction project, interest rates, economic decision making, life cycle costs, rate of return analysis, depreciation, income taxes, budgeting, financial statement evaluations, professional liability, investment analysis, value engineering and sustainable design calculations, cash flow analysis, engineering economics, appreciation, tax shelter, development history, zoning, tax laws, equity investments, LEED/sustainable development, and appraisal techniques. The instructor may arrange guest lectures and tours throughout the term. (prereq: junior standing)
Course Learning Outcomes
Upon successful completion of this course, the student will be able to:
- Determine the requirements necessary to finance a construction project from a lender’s perspective
- Relate relevant historical real estate development precedents to current situations
- Describe and solve financial measuring tools such as rate of return, discounted cash flow, and debt service coverage
- Calculate basic compounding and discounting measures
- Demonstrate the concept of depreciation
- Describe various contractual relationships and corporate organizational structures
- Organize, formulate, and present independent research on your proposed development
- Prepare preliminary building design alternatives, with construction and development cost estimates
- Structure financial alternatives needed to enhance a project feasibility
- Illustrate the various roles that government plays in the building process
- Apply engineering economics formulas
- Structure a financial analysis (case study) of a potential real estate development with an understanding of all the components that make up this analysis
- Use various quantitative real estate development tools necessary to evaluate alternatives, justify Life Cycle Cost (LCC) alternatives, and become a thoughtful decision maker
- Identify various sources for real estate financing and equity investments
- Analyze various property types, local economic business cycles, architectural designs, construction variables, governmental roles, community interactions, and personal motivations that are integral in every real estate project
Prerequisites by Topic
Course Topics
- Fundamentals of real estate development
- Real estate development history
- Entrepreneurship
- Current real estate topics-new urbanism
- Real estate development partners and organizational structures
- Engineering economics
- Current real estate development financial issues
- Building investment pro forma analysis/spread sheet formulation
- Site selection and analysis
- Public sector roles/community issues
- Pre-development analysis-preliminary design, construction estimates, preliminary financing, and market conditions
- Contract negotiation/development completion
- Life Cycle Cost (LCC) analysis and determinations
- Property management
Coordinator
CAECM Department Chair
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