Forecasting model for property prices in Geneva
Econometric model built in 1993, updated in 1996 and in 1999. Forecasting model for the prices of residential buildings in the canton of Geneva: explanation and forecasting the growth of the stock, the path of the rent index and the prices for individual traded buildings. Forecasts over three years. For UBS Bank Geneva (1993-1999). Publication in the French journal: Cahiers du G.R.A.T.I.C.E 21, 2002, pp.91-109
Estimation method for property values based on discounted cash flows
Rigorous development of a formula for computing the buyer’s or seller’s reservation value. That shows that it is better to compute the economic equity of the owner of a property and to add debt rather than to discount future earnings with the help of some average cost of funds. Indeed, economic equity changes with the value of the building, so no proper weighted average cost of funds can be computed. The model also shows how to take into account amortization, financing variants, renovation costs, redevelopment potentials and any other possible investment. It allows to choose between investment variants with a view to maximizing the property’s value for its owner.
Publication of a research paper.
A property rating system
Development of an evaluation system for buildings that takes into account not only future earnings but also the building’s physical condition and its potential for redevelopment. That instrument allows the comparison of variants with a view to choosing the best strategy from an economic point of view. Cooperation with the team of Professor Paul Meyer-Meierling, ETHZ. Support through Commission Technology and Innovation (CTI) (2000-2001). Publication of a report.
Mortgage Interest Rate: Variable vs. Fixed Dilemma
Most homeowners around the world take up a mortgage to finance the purchase of a house or any building. The most important decisions they have to make regard the amortization maturity and the type of interest rate. In particular, they have to choose between fixed (FRM) and variable or adjustable interest rate (ARM). This choice is important because it is costly to change after the signing of the mortgage contract.
In this part of his doctoral thesis (2010-2014), Philippe Bélanger investigated the international cost difference between an ARM and a FRM, taking into account the differences in risks and the hedging property of a FRM. He assessed the value of the implicit risk hedging included in the FRM using Swiss mortgage data. Next, he developed a risk-adjusted measure that facilitates comparisons between types of rates. Finally, he used the method and risk measure developed to make an international comparison of the fixed versus variable rates dynamic.
Development of a prospective statistical tool for real estate actors in French-speaking Switzerland
This project was born from the initiative of the company Les Portes de l’ Immobilier, which organizes the Forum immobilier romand (FIR). The goals were (1) to prepare for professionals a summary of the analyses and forecasts carried out in 2011 and early 2012 by the specialised institutes, and (2) to develop a simple model to explain the foreseeable trends in rents and property prices, specifically in Switzerland and French-speaking Switzerland. In addition, we conducted a survey of professionals to determine their vision of the business, forecasts and information needs. The summary of analyses and forecasts and the survey results were presented to the FIR on 30 March 2012.
Feasibility study for a new Swiss statistic on real estate prices
In response to MP Landolt’s motion, the Federal Statistical Office commissioned us to analyse the feasibility of a national real estate price index in 2012: identification of user needs and the resulting requirements for the index in comparison with existing indices; definition of the main characteristics of such an index; identification and evaluation of potential data sources; presentation of existing methods and those used in other countries; proposal of a solution for Switzerland; evaluation of the cost of this solution. On the basis of our report, the Federal Council approved the creation of a house price index on 7 November 2012.
Validation of the valuation of a pension fund’s real estate assets
In 2016, the aim was to assess the valuation method and principles used to value the properties in the portfolio of the Caisse de pensions du personnel de la Commune de Lausanne (CPCL), by reference to the rules applicable to pension funds. It was also a question of assessing in broad terms the consequences of possible changes in the main parameters on the balance sheet value and the yield of the buildings and making recommendations. An internal report was produced.