Hur påverkas direktavkastningskravet efter renovering? : Marknadens syn på direktavkastningskravet vid värdering av renoverade fastigheter

Sammanfattning: The Swedish real estate market is going through a period where many properties require extensive refurbishments, either to keep the property in good condition or for developing purposes. No matter which of the stated purposes, renovations of a larger scale lead to major changes in the affected property. This is, in turn, associated with substantial investments which will affect the value of the property to varying degrees. Theoretically this is something that should be reflected in the property yield to prevent incorrect valuations and possible write-downs. Parameters of interest are the ones included in the initial or exit yield such as the cost of capital and growth where the former depends on the risk premium. What is currently taking place in the real estate market regarding the property yield in conjunction with renovation is an interesting question since there are currently no predictions on how the former is affected. This paper aims to find out what happens to the yield after refurbishment and how different companies consider the ingoing parameters affecting the yield. The report has as its starting point the goal of explaining the concepts of total return, exit yield and income return and how they are assembled. The paper subsequently seeks to perform a deeper analysis of the property yield and which parameters can affect it. In particular, the concepts of risk and growth are analyzed with a focus on how they affect real estate property undergoing renovations. Thereafter we investigate how the property yield theoretically would be altered when the property is valuated after the renovation is completed. The empirical study is based on a total of nine interviews. Three of the interviews were held with companies who own residential properties, three with owners of mainly commercial properties and three real estate valuation companies. By doing this we hope to get a comprehensive coverage of how the market interprets our topic and how the property yield is considered in a renovation process. The study shows that among our respondents, there is a consensus that the property yields are generally reduced when the refurbishment process has been carried through by comparison to what they were during the original condition of the property. The main reason for this is said to be the reduced risk in form of higher technical quality resulting in a higher net operating income. The growth potential is also considered but not to the same extent, especially not by the commercial real estate companies which give it only limited attention. A final observation we made was the fact that none of the surveyed companies considered possible long-term risks in future high rents due to the increased quality of the property. This could be an indicator of an over-reliance on the Swedish real estate market although this requires further investigation.