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An analytic network process for risks assessment in commercial real estate development

Author

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  • Zhen Chen
  • Sukulpat Khumpaisal

Abstract

Purpose - The purpose of this paper is to introduce a novel decision‐making approach to risks assessment in commercial real estate development against social, economic, environmental, and technological (SEET) criteria. It therefore aims to describe a multiple criteria decision‐making model based on analytic network process (ANP) theory, and to use an experimental case study on an urban regeneration project in Liverpool to demonstrate the effectiveness of the ANP model. Design/methodology/approach - The paper commences with a description about risks related to commercial real estate development, and provides a list of risk assessment criteria based on literature review and experience in related areas. The ANP is then introduced as a powerful multicriteria decision‐making method. An experimental case study is finally conducted with scenarios and assumptions based on a real urban regeneration project in Liverpool. Findings - The paper defines a group of risks assessment criteria against SEET requirements directly related to commercial real estate development. An ANP model is set up with 29 risks assessment criteria, and results from an experimental case study reveal that the ANP method is effective to support decision‐making based on risks assessment to select the most appropriate development plan; and therefore it is applicable in commercial area. Originality/value - This paper defines SEET criteria for risks assessment in regard to SEET requirements to emphasise sustainable development; while the ANP is introduced to assess risks in commercial real estate development. The ANP model provides a platform for decision makers in commercial real estate development to evaluate different plans based on the degree of interactions among risk assessment criteria.

Suggested Citation

  • Zhen Chen & Sukulpat Khumpaisal, 2009. "An analytic network process for risks assessment in commercial real estate development," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 27(3), pages 238-258, April.
  • Handle: RePEc:eme:jpifpp:v:27:y:2009:i:3:p:238-258
    DOI: 10.1108/14635780910951957
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    Citations

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    Cited by:

    1. Aleksandra Kuzior & Anna Liakisheva & Iryna Denysiuk & Halyna Oliinyk & Liudmyla Honchar, 2020. "Social Risks of International Labour Migration in the Context of Global Challenges," JRFM, MDPI, vol. 13(9), pages 1-31, September.
    2. Wen-Shiung Lee, 2013. "Merger and acquisition evaluation and decision making model," The Service Industries Journal, Taylor & Francis Journals, vol. 33(15-16), pages 1473-1494, December.
    3. Ewelina Badura, 2020. "Investing in Real Estate - Legal Risks," MIC 2020: The 20th Management International Conference,, University of Primorska Press.
    4. Wen Shiung Lee & Ya Ting Yang, 2013. "Valuation and choice of convertible bonds based on MCDM," Applied Financial Economics, Taylor & Francis Journals, vol. 23(10), pages 861-868, May.
    5. Carsten Lausberg & Stephen Lee & Moritz Müller & Cay Oertel & Tobias Schultheiß, 2020. "Risk measures for direct real estate investments with non-normal or unknown return distributions," Zeitschrift für Immobilienökonomie (German Journal of Real Estate Research), Springer;Gesellschaft für Immobilienwirtschaftliche Forschung e. V., vol. 6(1), pages 3-27, April.
    6. Anelli, Debora & Tajani, Francesco, 2023. "Spatial decision support systems for effective ex-ante risk evaluation: An innovative model for improving the real estate redevelopment processes," Land Use Policy, Elsevier, vol. 128(C).
    7. Obinna Collins Nnamani, 2018. "Application of Quantitative Risk Analysis in Property Development Projects in Nigeria: A Review," ERES eres2018_8, European Real Estate Society (ERES).

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