Evaluating of the effectiveness of investing in commercial real estate on example of apartments

The graduation thesis on the theme: “Evaluating of the effectiveness of investing in commercial real estate on example of apartments” contains 4 figures, 17 tables and 1 Appendix. The volume of work is 94 pages. For writing were used 48 sources. Key words: market of apartments, investment in apartments, investment project, estimation of efficiency of investments, the risks of the investment project.The topicality of the research is caused by the fact that currently the development of the investment market for commercial real estate requires the identification and justification of the most effective directions for the implementation of investment. Therefore, the hypothesis raised in the beginning, is as follows: investment in the apartment are the attractive and efficient from the economic point of view.The aim of this work is to evaluate the effectiveness of investments in commercial property, for example, the apartments. Object of research is a mini-hotel of the city of St. Petersburg "A-Boutique Hotel". Subject of research is the process of assessing the effectiveness of investment project on creation of the apartments. The goal of the research work necessitates detailed analysis of the functioning of the commercial property market and peculiarities of investing on it, but also studying of methodology of an estimation of efficiency of investment, identification of important evaluation criteria, based on the specifics of the investment object. Aspects of functioning of the market of commercial real estate, apartments market, problems of investment activity and evaluation of effectiveness of implementation of investment widely presented in the scientific literature and the periodical sources. Practical significance of the research lies in the fact that the main conclusions of the study developed a methodology to assess the effectiveness of investment in apartments and valuation model of dependence of efficiency of investments from external factors can be used by a wide range of investors. In the first section of the paper discusses the peculiarities of organization of commercial real estate market in general. This Chapter explores the characteristic features of the objects of commercial real estate as objects of investment and substantiates the direction of the apartment, as the most attractive destination for investments in the commercial real estate market of St. Petersburg. In the second Chapter a description of the type of commercial hotel property "apartments" provides. Then, the level of supply and demand on the market of apartments in St. Petersburg is analyzed with the aim to identify the level of investment appeal of the market of apartments for implementation of investment. In the third Chapter there is the assessment of economic efficiency of investments in construction of apartments in total room Fund of the hotel company "A-Boutique Hotel". First of all, the financial-economic state of a potential investor - mini-hotel "A-Boutique Hotel" is analyzed. Then the investment project on realization of investments in the creation of new non-apartments in total room Fund of the mini-hotel is developed. After that, the level of efficiency of the developed investment project is assessed by means of calculation of the static and dynamic parameters of efficiency of investment. The final work stage is the analysis of the dependence of efficiency of the project risks by simulation modeling. Based on the analyzed data on the apartments market of St. Petersburg we reveal that for modern economy, the market of commercial real estate of Saint Petersburg has the tendency of active development of the segment of apartment hotels. However, this trend is new on the market of tourist accommodation in the city, which confirms the emptiness of this segment and the lack of competitors. In addition, according to the leading consulting companies, direction of the apartments is investment attractive because the payback period is not exceeding 7 years, and the rate of return up to 20%.After analysis of investment appeal of the market of apart-hotels in St. Petersburg we make the analysis of financial-economic position of a potential investor - mini-hotel "A-Boutique Hotel". The financial position of the enterprise is characterized by stable. On the basis of the study of the peculiarities of the investment object - apartments, we develop the investment project on creation of new three rooms-apartments in total room Fund of the mini-hotel. This project entails the purchase of the premises with a total area of 127 square meters and reconstruction of the premises under 3 rooms-apartments. The project is developed jointly with the designer of a mini-hotel and confirmed in a building brigade of the enterprise. Total cost of the project is 16 000 000 rubles and consists of the cost of accommodations and other expenses for reconstruction. Amount of investments is credit from e Alfa-Bank at 14% annual for the term of 6 years. Debt repayments will be made annually in the amount of 4 114 600 rubles.The project of investment in building the apartment is evaluated from the economic point of view through an analysis of risk exposure, assessing the strengths and weaknesses of the project and calculation of indicators of efficiency of investments. The result is that the net present value from the project is 459 607 rubles (greater than zero), discounted payback period does not exceed 7 years, and the internal rate of return of the investment exceeds the rate of a Bank credit, which indicates the profitability of the investment project efficiency from an economic point of view and attractiveness for investments.Because investment in apartments is an investment in the facilities of the hotel property, consequently, the project should be analyzed on the dependence of efficiency of investment from potential tourist risks. We develop the simulation model to evaluate the dependence of efficiency of investments in the creation of the rooms-apartments in total room Fund of the hotel company "A-Boutique Hotel" from the identified key factors associated with the risk of tourist underutilization of interest and the growing number of competitors, which, in turn, influences the reduction of implementation costs rooms-apartments. By applying the model to the developed investment project we reveal that the probability of losses from the project does not exceed 10.5 percent. Thus, the survey is developed methodology of evaluation of efficiency of investments in apartments and by this, it is revealed that at present time investments in the apartment are the attractive, fast and efficient from the economic point of view.