Dynamics of Real Estate Development: MIT Professors to Lecture in Beijing and Shanghai in June

Professors David Geltner and Richard de Neufville will travel China in June 2017 to share recent work developed with the support of the Samuel Tak Lee MIT Real Estate Entrepreneurship Lab (STL Lab). They will lead a series of one-day short courses discussing the dynamics of real estate development in China. Their work emphasizes how these dynamics in China differ from those in liberal market economies in North America and Europe, and suggests policies to avoid potential market failures or collapse. The courses will build upon the textbook they completed in March, Flexibility and Real Estate Valuation under Uncertainty: A Practical Guide for Developers.

These short courses result from the collaborative support of the MIT Center for Real Estate (CRE), the Hang Lung Center for Real Estate of Tsinghua University in Beijing, and the School of Public Economics and Administration of Shanghai University of Finance and Economics. In line with MIT’s motto and its tradition of combining theory and practice, the professors will give the courses in two styles, one for academic audiences, and the other for real estate developers. The Beijing lectures will take place in Tsinghua University on June 2, 2017, for an academic audience and June 4, 2017, for real estate developers. The Shanghai lectures will occur at Shanghai University of Finance and Economics on June 6, 2017, for an academic audience and June 8, 2017, for real estate developers. The presentations will be interactive, promoting stimulating communication and discussion. They start at 9 AM and continue, with breaks, until 4 PM.

The lectures stress the importance of acknowledging the dynamics of real estate, understanding how special administrative features drive these dynamics in China, and appreciating the issues in maintaining stability in the market prices. Prof. Geltner begins the course with a lecture titled Uncertainty in Practice, Quantifying Future Value Uncertainty in Development Projects of Real Estate. This presentation will show how the real estate markets function in western countries under a market economy, emphasizing their fluctuations over time. It will demonstrate how to analyze these fluctuations to understand the eight most important types of uncertainties that influence these variations in market prices. It will close with a demonstration of how real estate analysts and developers can model these uncertainties using spreadsheets (such as Excel), which provide the basis for valuing real estate properties.

Prof. de Neufville will then present Flexibility in Design in Real Estate Projects. He will present the concepts of flexibility and “real options.” The idea is to maximize the expected value of development projects by using options to avoid losses when the markets go bad while increasing benefits when the market is good. He will show how to identify and benefit from flexibility, building upon a case study from China, the Dushi Huayua” Housing Development Project. Attendees will learn about using flexibility to increase expected value, which will increase their ability to develop real estate projects successfully.

MIT doctoral student Xin Zhang will close the session with a presentation on the dynamics of Chinese real estate markets as he has developed in his research. The title of his presentation is Develop a System Dynamics Perspective on Chinese Urban Housing Market. He explores questions such as, what happens when the government changes policies regarding home purchase or land leasehold sales? To gain insight on the possible effects of policy interventions, he provides a useful “systems” perspective. In this part, attendees will see how to model and analyze the housing market in a typical Chinese city using system dynamics simulation of the market, including elements of the system that are unique or prominent in China. Computer models can represent the major elements in the housing market and the major linkages and dynamic relationships between them. His session will include opportunities to use the model in the classroom. Following this collaborative activity learning and getting acquainted with the SD Model, the Zhang will add more interactive activities between the lecturer and the audience, letting people operate and test the model, and stimulating an open discussion about issues in Chinese housing markets.

Prof. Geltner is the associate director of Research from the MIT Center for Real Estate and professor of real estate finance in the Department of Urban Studies and Planning. He is the lead author of standard textbook Commercial Real Estate Analysis & Investments (3rd Edition, OnCourse Learning). Prof. de Neufville is professor of engineering systems at the MIT Institute for Data, Systems, and Society. He is the lead co-author of the book Flexibility in Engineering Design (MIT Press, 2011). Zhang is completing his PhD at MIT under the supervision of Professors de Neufville and Geltner. He previously graduated from MIT with Master of Science from the departments of Urban Studies and Planning and Civil and Environmental Engineering. He will defend his dissertation spring 2017

The courses are supported by Fan Yang, a visiting doctoral student from Dalian University of Technology. His research focuses on urban planning and the sustainable development of real estate. He has been president of the student union in his university and chairman of the student association in Liaoning Province, as well as an Olympic torch bearer for the 2008 Beijing Olympic Games, and a participant in the 2016 World Economic Forum.

The courses are free. If you want to join, please send an email to Fan Yang (fanfan@mit.edu) with the subject “Applying for the Lecture”. Please include in the email your name, company/university, title, personal photo, a brief introduction, the purpose of your application, and your contact information (telephone number and email address). Because of the limited number of seats, we will select the applicants based on their career, profession, organization, and experience in order to create audiences that will be most beneficial and profitable to all concerned.

The application deadline is May 14, 2017. Yang will confirm and email selected applicants by May 21.