Abstract:
Investment in Commercial property development is an important component of investment portfolios of
the government, individuals, many companies of different size, and lending institutions. Investment
analysis is a complex and important problem faced by such investors, usually requiring distinct
approaches and proper tools according to the nature and complexity of the operations. There are number
of investment analysis methods used in the industry, but each of them focuses on different factors and has
its limitations. Investment analysis is more closely related to the market behavior because the objective of
capital investment in the private sector is generally profit maximization within a specific time frame
rather than benefit-cost analysis and economic analysis. Due to the lack of clear understanding of
investment analysis and market behavior of property developers, investors and lending institutions
heavily expose their portfolios to property development risk and subsequently suffer huge losses. Thus a
more vigorous method is needed with a simple model to follow when analyzing the viability of
commercial property development.//
A research was undertaken to develop a model for financial evaluation of commercial property
development projects with the perspective of investors as well as lenders. Available models (locally and
internationally) were researched through literature, internet survey and interviews of professional in
property development companies, lending institutions and investors.//
The proposed financial evaluation model which determines rental rate for build and hold commercial
properties was developed by incorporating the existing methods used in the world together with the
responses derived from local professionals engaged in property development and lending organizations.
The refined financial evaluation model which leads to development of computer based software is
developed at the second stage according to the comments given by professionals in the industry.
