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Real Estate Risk Analysis: The Case of Caserma Garibaldi in Milan

Leopoldo Sdino    
Paolo Rosasco and Sara Magoni    

Resumen

The global economic crisis and deep financialization processes recently suffered by the real estate market have exposed the latter to further and greater risks. Against this, the importance of real estate risk management has noticeably grown within the dynamics of both markets, real estate and finance. Therefore, the aim of this paper is to develop a comprehensive tool for the risk rating that will consider both the systematic and idiosyncratic risks possibly incurred during a real estate operation, in order to deliver their actual magnitude. It will be composed of 33 criteria whose weights are determined through the application of an analytic hierarchic process on a panel of market operators. This tool is primarily addressed to investors since it allows making strategic decisions while being supported by an analytical procedure that also ensures transparency of the conduct for the rating. An application of the presented tool within the decision-making procedure of the re-functionalization of a former barracks in Milan?s city center is then described; this case study will also constitute an opportunity to highlight the strong relationship that occurs between the profitability of an operation and the risk incurred.

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