Real Estate Finance
K. S. Maurice Tse, The University of Hong Kong, Spring 2007
E-mail: ktse@econ.hku.hk
Class hours:
Tue
Thur
11:40 am - 12:30 pm (K223)
10:40 am – 12:30 pm (K223)
Course Objectives:
Real Estate represents a large fraction of the world's wealth. Its efficient utilization and the markets in
which it is traded involve many interesting and complex economic and policy issues. A proper
understanding of the real estate market is important for individuals to make sound savings and
investment decisions, for businesses to make the right decision on whether to buy or lease a property,
and important for banks to evaluate the asset risks underlying their mortgage loan portfolios and to
innovate real estate related financial products. The objective of this course is to develop an analytical
framework by which students can make sound real estate investment decisions. The main emphases
of the course are on theory, concept building, financial modelling, and practical application. In
particular, class discussions will cover the following areas in real estate:
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Real estate markets and investments, appraisals, and development
Institutional aspects of real estate finance
Financing strategies for Real Estate
Mortgage Markets, Mortgage-Backed Securities, and Real Estate Investment Trusts (REITs)
Real Estate Transactions
Valuation of Land
Valuation of Income Producing Properties and Redevelopment of Real Estate
Materials and data pertaining to local real estate market will be used throughout the course whenever
possible.
Text and Reading Materials:
There is no required text book for this course. Reading materials for all topics will be handed out in
class as well as put on reserve at the HKU library. Students are responsible for all materials.
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References: Real Estate Finance and Investments, Bruggeman and Fisher, 9th Edition, Irwin.
Required Tool:
A standard financial calculator such as TI BA35 and HP 12C.
Grading Policy:
The course grade will be based on tutorial discussions on local real estate market, take-home
assignments, and a semester-end exam. The point distribution is as follows:
Tutorial Participation and Discussion
Take Home Assignments
Semester-End Final Exam
20%
20%
60%
Problems sets will be assigned, but some will not be collected and therefore not graded. The purpose
of the assignments is to assist you in reviewing the materials and preparing for the exams.
Reading
Assignments
Date
Day
Topic
Jan 30
Feb 01
Feb 06
Feb 08
Feb 13
Feb 15
Feb 20
Feb 22
Feb 27
Mar 01
Mar 06
Mar 08
Mar 13
Mar 15
Mar 20
Mar 22
Mar 27
Mar 29
Apr 03
Apr 05
Apr 10
Apr 12
Apr 17
Apr 19
Apr 24
Apr 26
May 01
May 03
May 08
May 10
Tue
Thur
Tue
Thur
Tue
Thur
Tue
Thur
Tue
Thur
Tue
Thur
Tue
Thur
Tue
Thur
Tue
Thur
Tue
Thur
Tue
Thur
Tue
Thur
Tue
Thur
Tue
Thur
Tue
Thur
Introduction
Hong Kong Property Market
Capital and Property Market
Capital and Property Market
Financing Residential Properties
Financing Residential Properties
Third Day of the Lunar New Year
Financing Residential Properties
Mortgage Backed Securities
Mortgage Backed Securities
Mortgage Backed Securities
Real Estate Investment Trusts in Hong Kong
Reading Week
Readking Week
Real Estate Investment Trusts in Hong Kong
Real Estate Auctions in Hong Kong
Real Estate Auctions in Hong Kong
Real Estate Auctions in Hong Kong
Pre-Sale Transactions
Ching Ming Festival
Pre-Sale Transactions
Default Risk in Real Estate Transaction
Default Risk in Real Estate Transaction
Default Risk in Real Estate Transaction
Valuation of Income Properties
Valuation of Income Properties
Labor Day
Land Valuation
Land Valuation
Valuation of Redevelopment of Income Properties
Lecture notes
Lecture notes
Lecture notes
Lecture notes
Lecture notes
Lecture notes
Lecture notes
Lecture notes
Lecture notes
RM1, RM2
Lecture notes
Lecture notes
Reading Materials
RM1: Jeffrey Fisher, George Lentz, and K.S. Tse, “Valuation of the Effects of Asbestos on
Commercial Real Estate.”
RM2: George Lentz and K.S. Tse, “An Option Pricing Approach to the Valuation of Real
Estate.”
Tse 2