Risk-based management of an investment project that contemplates reproduction of real estate

Vestnik MGSU 9/2012
  • Trukhina Natalya Igorevna - Moscow State University of Civil Engineering (MGSU) Doctor of Economics, Professor, Moscow State University of Civil Engineering (MGSU), 26 Yaroslavskoe shosse, Moscow, 129337, Russian Federation; This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
  • Chernyshikhina Irina Ivanovna - Voronezh State University of Architecture and Civil Engineering (Voronezh GASU) postgraduate student, Voronezh State University of Architecture and Civil Engineering (Voronezh GASU), 84 Dvadtsatiletiya oktyabrya st., Voronezh, 394006, Russian Federation; This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Pages 227 - 233

Making investments into projects that contemplate reconstruction and renovation of residential
housing is always accompanied by particular risks. Risky investments are highly profitable while
low-risk investments have a low profit margin. The task of an investor is reduced to identification of
the most desirable "risk income" in the course of the due diligence of a specific investment project.
The authors present a formal approach to the management of a real estate investment project
with account for the risks that may arise in the course of its development and implementation. We
consider passive and proactive types of investment control. The problem of proactive management
represents projecting potential investment project development patterns, ongoing monitoring
of the market situation, involvement of profit generating assets, disposal of low-profit assets. The
passive type of management involves compilation of a well-balanced mix of investment operations
that contemplates a pre-set level of risk (for example, through reasonable diversifi cation) within an
extensive period of time.
Particular attention is driven to the optimal choice of an investment project based on the rate
of return and risks. The profitability represents an average value, while the risk is identified by using
the method of dispersion. Optimization of investment projects is performed on the basis of the
profi tability-to-risk ratio. The main feature of this method is that the limits of an admissible risk aren't
specified there, and the extent of risk correlates with the amount of potential revenues to be generated.
Thus, we believe that it is possible to derive an obvious decision-making formula on the basis
of certain assumptions.

DOI: 10.22227/1997-0935.2012.9.227 - 233

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