A risk assessment model of commercial real estate development projects in developing countries

Abstract

Commercial real estate investments play a direct role in economic welfare, yet they are high-risk investments, especially in developing countries. If the risk factors directly affecting the project objectives are not analyzed correctly, financial losses are inevitable in Commercial Real Estate Development (CRED) projects. In this respect, this study aims to identify and prioritize the risk factors and introduce an Analytic Network Process (ANP) model to assess the risks in CRED projects in developing countries. The findings of this study reveal the importance of "Exchange rate and inflation rate fluctuations," "Political instability," and "Location selection" risk factors for CRED projects in developing countries. Five case studies are also conducted to test and support the effectiveness of the proposed model. The proposed model provides a clear perspective for decision-makers or stakeholders of the CRED projects to assess their risk criteria in order to take proper actions.