Introduction to Investments PDF by Kenneth Appiah Donkor-Hyiaman

1/12/25 LE 457: Property Investment Appraisal Introduction to Investments Dr. Kenneth Appiah Donkor-Hyiaman Email: [email protected] Tel: 0508043011 Office No: New Blk (Room 420)...

1/12/25 LE 457: Property Investment Appraisal Introduction to Investments Dr. Kenneth Appiah Donkor-Hyiaman Email: [email protected] Tel: 0508043011 Office No: New Blk (Room 420) 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 1 1 Topic Objectives What is an investment? What are the different types of investments? What are the characteristics of the different types of investments? Where are different classifications of investments markets and assets? Comparative statistics on global investment asset classes How do we measure the performance of different investment assets – stocks, bonds, real estate? Portfolio theory 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 2 2 1  1/12/25 Main Content 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 3 3 Other Information Expectation: the student will - apply the tools presented during the lectures; - include analytical and quantitative work informed by qualitative judgement; - demonstrate willingness to learn and read. 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 4 4 2  1/12/25 Assets and Returns Pike, Neale and Linsey (2015), chapter 2 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 5 5 The Real Estate System 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 6 6 3  1/12/25 What is an Investment? Any act which involves the sacrifice of an immediate and certain level of consumption in exchange for the expectation of an increase in future consumption. Forgo the present consumption in order to increase resources in future. 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 7 7 Financial Markets Source: Pike, Neale and Linsey (2015) 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 8 8 4  1/12/25 Functions and Players 12/01/2025 Dr Kenneth Donkor-Hyiaman, Source: Pike, NealeDepartment of Land and Linsey Economy (2015) 9 9 Available Assets/Investments Equity - Domestic/ Foreign (Developed vs Emerging Markets) Bonds - Government - Corporate - Mortgage-backed securities Real Estate - Buildings/Companies investing in buildings/other tools Alternative Assets - Commodities: Gold/ oil / etc - Hedge Funds - Arts, Wine 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 10 10 5  1/12/25 Classification of Asset and Investment Markets Public markets - Generally single central market place - Usually regulated order processing systems - Price and deal transparency - Market makers / brokers role defined - Market makers limited impact on prices? Private Markets - Generally no central marketplace - Highly restricted transparency and information - Asymmetric information? - Market maker, broker role self-defined - Market makers may influence prices? 12/01/2025 11 11 Real Estate as an Asset Class Major Types of Capital Asset Markets and Investment Products 12/01/2025 12 12 6  1/12/25 How much is the World Worth? Property remains the world’s biggest store of wealth Source: Savills Research (2024) 12/01/2025 13 13 The most valuable real estate markets 12/01/2025 14 14 7  1/12/25 Top 10 countries by real estate value 12/01/2025 15 15 Regional Distribution of Global Real Estate Value compared to Population 16 16 8  1/12/25 Africa’s Real Estate Value The Real Estate market in Africa is expected to reach a value of US$17.64tn by 2025. Within this market, the Residential Real Estate segment dominates with a projected market volume of US$14.87tn in 2025. It is anticipated that the market will experience an annual growth rate of 5.58% from 2025 to 2029, resulting in a market volume of US$21.92tn by 2029. When comparing the Real Estate market market globally, 0 is expected to generate the highest value, with 0 in 2025. The real estate market in Kenya is experiencing a surge in demand for affordable housing due to rapid urbanization. 12/01/2025 17 17 Africa’s Commercial Real Estate Value The Commercial Real Estate market market in Africa is anticipated to achieve a significant milestone, with a projected value of US$2.77tn in 2025. This impressive figure is expected to exhibit a steady growth rate of 3.67% annually from 2025 to 2029, resulting in a substantial market volume of US$3.20tn by 2029. 12/01/2025 18 18 9  1/12/25 Asset Performance 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 19 19 Equities 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 20 20 10  1/12/25 Equities: In MS Excel 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 21 21 Bonds 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 22 22 11  1/12/25 Bonds: In MS Excel 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 23 23 Real Estate 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 24 24 12  1/12/25 Real Estate: Adding an Uplift 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 25 25 Real Estate: Final Formulae 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 26 26 13  1/12/25 Returns and Yields 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 27 27 Initial Yield 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 28 28 14  1/12/25 Reversionary Yields 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 29 29 Equivalent Yield 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 30 30 15  1/12/25 All-Risk Yield 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 31 31 Equated Yield 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 32 32 16  1/12/25 12/01/2025 Dr Kenneth Donkor-Hyiaman, Department of Land Economy 33 33 17