RISK MANAGEMENT SYSTEM FOR REAL ESTATE IN INDIA

Risk management is about identifying all risks to which an entity is exposed or might be exposed (Which can be financial or non-financial) and defining and implementing measures that will help to monitor, measure, manage and report these risks As the Real Estate risk represents a part of the capital investment risk, a demarcation vis-a-vis other capital investments is necessary. Contrary to the alternative investments, real estate are marked through their special features like connection with the location, heterogeneity, high investment volume and transaction costs, length of the life cycle as well as duration of the development process. There are different types of risks occur during the life cycle of the real estate. Risks out of the development-, i.e. project development phase have considerable influence on the further risks of the life cycle of the real estate. In practice the real estate risk is seen as potential negative change in the value of individual real estates, through depreciation of the general real estate situation or the individual features (e.g. vacancies, construction damages, changed chances of use), and is interpreted e.g. with rent default risk, fixed costs risk, depreciation of going-concern value risk, loss on disposal risk and investment risk..