| Author: | Chan, Shing Tak |
| Title: | The analysis of multi-criteria investment decisions on institutional investors’ real estate investment return in Hong Kong |
| Advisors: | Hui, Eddie (BRE) Fan, Ying (BRE) |
| Degree: | DIREC |
| Year: | 2024 |
| Subject: | Real estate investment -- China -- Hong Kong Real estate business -- China -- Hong Kong Real estate investment -- China -- Hong Kong -- Data processing Hong Kong Polytechnic University -- Dissertations |
| Department: | Department of Building and Real Estate |
| Pages: | xii, 137 pages : color illustrations |
| Language: | English |
| Abstract: | Real estate investment has consistently garnered significant attention in the context of Hong Kong’s vibrant market. This study aims to explore the investment criteria and historical patterns of institutional real estate investments in Hong Kong, with a particular focus on the growing presence of non-traditional local players. Increasingly, Hong Kong has witnessed an influx of foreign capital from diverse sources, such as Sovereign Wealth Funds (SWF), insurance companies, city investment firms, pension funds, asset managers, and banks. This trend points to a rising interest among international institutional investors in the Hong Kong real estate market. By examining the investment strategies and decision-making processes of these institutional investors, this study seeks to provide valuable insights into the evolving landscape of Hong Kong’s real estate sector. The study will employ a variety of analytical techniques including the multi-criteria decision-making (MCDM) method and data sources to evaluate the performance of different investment criteria utilized by institutional investors, and their impact on real estate investment returns. The results of this study will be of great significance to institutional investors, policymakers, and other stakeholders in the Hong Kong real estate market. Evaluating the commercial real estate (CRE) investments in Hong Kong is becoming a significant study aspect with an overview of the investment criterion by Institutional Investors. This paper adopted a multi-criteria expert decision system from industry experts for evaluating and identifying key decision factors in making their decisions. Institutional investment in real estate represents a highly specialized segment within the finance industry. As institutional investors manage and allocate funds on behalf of others, they are entrusted with significant responsibility and fiduciary duty to make prudent, accurate, and accountable investment decisions. Achieving this requires a comprehensive understanding of both the real estate and finance sectors, as well as the ability to apply professional knowledge to complex investment situations. This research was carried out in three phases. In Phase 1, I conducted surveys with different industry professionals and analyzed the results for multi-criteria decision analysis to weigh various External and Internal Factors in real estate investments in Hong Kong. The raw data would then be analyzed with the MCDM method via weighted sum method and AHP. During Phase II, in-depth interviews would be carried out with specific real estate investors on selected lively cases. The MCDM results would then be testified with real investment cases taken into account various Internal and External Factors which are weighted by the responsible officers. In Phase III, we applied the weighted results on different criteria into the selected cases and compared them to the actual investment performance. It was revealed that the Phase I and Phase II results are satisfactorily tested with real lively cases. The tested results tallied with the actual performance of those 6 selected cases with different investment size and sectors. The weighted set of Internal Factors and External Factors are considered to be a good tool testing the success of those invested cases. This paper would also cover the latest application of Artificial Intelligence (AI) in helping the investment professionals on their real estate investments away from bounded rationality. The Artificial Intelligence Real Estate Analytics Tool (“REA Tool”) has been formulated and introduced integrating the MCDM results from Phase I, Phase II and Phase III. The REA Tool can be used to analyze different investment cases considering various market factors as well as the Internal and External factors. The analyzed results would be automatically tabulated into an easily readable quadrant format. The AI REA Tool has taken into account the latest market transaction data and market statistics from reliable Government sources. Through the result from this study, it is revealed that Government Policies is the most influential External Factor. Among such, Land Use Policies, Property Yield and Bank Lending Policies are the most important sub-factors. Among the Internal Factors, Risk Adjusted Returns and Ability to obtain loan and financing are the most critical ones. Collaborating with professional service providers can offer valuable insights and tailored solutions across various aspects of real estate investment, including legal, financial, and technical perspectives. By partnering with local investors and developers, institutional investors can better navigate the intricacies of the Hong Kong market and capitalize on synergistic opportunities. To maintain Hong Kong’s appeal as an attractive destination for institutional investment, the government can develop and implement policies designed to encourage a more diverse array of market participants. By fostering an environment conducive to collaboration and growth, Hong Kong can continue to thrive as a hub for real estate investment, leveraging the expertise and resources brought by institutional investors from around the world. Also, it would give a good benchmark for public and regulators a more holistic picture to understand and govern the acts and investments from these institutional investors. With the implementation of the AI REA Tool and research results, it can help the public and market practitioners to understand more about these new forces of investors and about their investment decision making criteria. The application of AI can help analyzing the vast amount of statistics and market transactions. With more professional and regulated participants in Hong Kong, it would enhance the liquidity and transparence of the real estate investment market in Hong Kong. The strong and powerful application of AI can help the institutional investors’ decision in a more organized, informed, and well-equipped manner. The powerful AI platform is another good benchmarking reference for future investment professionals. By implementing other multi-city data into the REA Tool, this tool can be applied to other locations too. |
| Rights: | All rights reserved |
| Access: | restricted access |
Files in This Item:
| File | Description | Size | Format | |
|---|---|---|---|---|
| 7631.pdf | For All Users (off-campus access for PolyU Staff & Students only) | 3.31 MB | Adobe PDF | View/Open |
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