Purpose
The RES Market Simulation Model is a comprehensive, fully interactive, and transparent model designed
to replicate the workings of the property market. It enables users to create consistent forecast scenarios
for leveraged and unleveraged income, capital, and total returns, which are comparable across different
countries and sectors.
Solution
- Customisable to specific country, city, or sector breakdowns.
- A fully interactive forecasting model that adapts to user inputs.
The Model projects the performance of portfolios consisting of core, well-let properties, based on user defined scenarios, including:
- Rental growth and yields.
- Vacancy periods
Features
- Rental growth
- Yield change
- Vacancy periods
- Total return
- Income return
- Capital growth
- The model accurately simulates future cash flows, factoring in:
- Lease expiries and reversionary potential.
- Rent reviews, indexation uplifts, and the letting of vacant units.
- Income deductions for revenue costs and capital deductions for capital costs.
- Letting periods applied at lease expiries.
- Future capital values are calculated by capitalising forecasted cash flows with the projected yield, offering a clear projection of capital growth.
Adherence to Global Standards
The RES Market Simulation Model faithfully replicates the Global Information Performance Standards methodology, as used by MSCI, for calculating market performance:
- Projects net income receivable and capital values to build both leveraged and unleveraged return scenarios, based on gearing and interest rate assumptions.
- Offers full descriptive measures, including initial yields, vacancy rates, reversionary potential, and over-renting levels
Build your own House View
Customise Market Structure: Tailor the simulation to reflect your preferred market segmentation, with the flexibility to aggregate data by sectors, countries, or regional groupings (e.g., Southern Europe).
Input Market Outlook: Enter your own projections for rent growth and yield movements to shape the model’s forecast.
Adjust Key Assumptions: Modify assumptions for irrecoverable costs, capital expenditures, and vacancy rates to align with your expectations.
- The model provides return estimates for customisable timeframes, such as calendar year, year-to-date, or 5-year annualised periods
- The model includes a comprehensive set of diagnostics, including the gross-to-net ratio, to support analysis.