What are you teaching your students with regards to the mortgage crisis that rocked the US and the scope of such practices in developing economies?
US subprime loan crisis questioned some of the beliefs that property market had. The new innovations in financial markets that created new products and here I am talking about securitization, while on one hand provided liquidity to the “non-liquid” real estate markets, lowered interest rate for borrowers, freed lenders of some of their risks and opportunities for large number of investors to share the real estate pie, on hindsight these innovations also raised the concern that investors invest in such products in an arms length way without understanding the underlying asset, it could cause disaster. Real estate drives its values from fundamentals and is local in nature. We in our subjects
– explore the fundamentals that drive real estate markets. These are related to real economy
– talk about financial markets, the role that interest rates play in determining investment in real estate
– talk about property cycles and their unpredictability
– talk about innovations in real estate investment market
The world is globalized and what happens in matured markets affect us, directly or indirectly.
Is the built-environment prepared enough to be able to provide to the shelter needs of the country over the next 5 years ? What are the challenges you foresee?
There are number of issues which pose challenge for meeting shelter needs. First we have to understand the nature of this challenge. Of the total shortage, almost 95% is in the affordable housing segment while the supply of new housing is in luxury and high end segment. We also have other issues such as lack of rental housing and a large proportion of houses that are vacant as Census 2011 showed. If the requirement is in affordable housing segment, we can’t build these on high cost land. Low cost land can’t be made available in cities without government intervention. Time in obtaining approvals and technology are other key considerations. Prefab technologies can reduce the cost but then they are still not easily
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