Industries · Infrastructure
Construction, real estate and infrastructure
How buildings and infrastructure get planned, financed, built and owned: developers, contractors, investors and REITs, cap rates and occupancy, why large projects run over budget, how public-private partnerships work, and how to read giga-projects in the Gulf with a neutral eye.
37 min, 3 lessons. Facts checked against sources on
Key takeaways
- Real estate has two businesses that are easy to confuse. Developing and building is a project business: take risk, build, sell or hand over, earn a margin.
- A developer earns the gap between sale value and total cost, and that gap is small compared with the total.
- Construction and real estate cases usually ask whether to build or buy, how to fix a loss-making contractor, how to value or reposition a property, or how to deliver a large public project.
By the end you will be able to
- Explain the roles of landowners, developers, contractors, lenders, investors and operators
- Calculate a developer's margin and the effect of a cost overrun
- Value a property with net operating income and a cap rate, and explain why values fall when cap rates rise
- Explain why large projects often run late and over budget, and how PPPs share risk
- Crack typical construction and real estate cases, starting with the right driver
Lessons
- 1.How construction and real estate work: who builds, who owns, who paysThe chain from land to a finished, rented building; how each player earns money; the asset types; and the metrics that matter.12 min
- 2.Real estate economics and project delivery: margins, cap rates, overruns and PPPsA developer's margin, how cap rates set values, why projects overrun, how the construction supply chain works, and how PPPs share risk.14 min
- 3.Construction and real estate players, trends 2024 to 2026, and how to crack the casesWho the players are by region, what changed from 2024 to 2026 (including Gulf giga-projects, framed neutrally), regulation basics, prompts, traps and drills.11 min
Worked cases in this module
Look it up
- Value chain
- Working capital
- Capex (capital expenditure)
- Fixed cost
- IRR (internal rate of return)
- NOI (net operating income)
- Cap rate (capitalization rate)
- REIT (real estate investment trust)
- EPC contract (engineering, procurement and construction)
- Public-private partnership (PPP)
- Availability payment
- Loan-to-value (LTV)
- Discount rate and hurdle rate
- Net present value (NPV)
- Sensitivity analysis
- Bottleneck
Start with lesson 1
3 lessons, about 37 minutes in all. Each one builds on the one before.