THE ESSENCE OF INVESTMENT DECISIONS IN REAL ESTATE

Pavel Zelisko

doi:10.58898/ijmt.v4i2.23-31

Authors

Pavel Zelisko University Union – Nikola Tesla, Faculty of Management, Sremski Karlovci, Srbija

DOI:

https://doi.org/10.58898/ijmt.v4i2.23-31

Keywords:

investment decisions, real estate, multi-criteria analysis, VIKOR, emerging markets, investor heterogeneity

Abstract

The purpose of this article is to examine the essence of investment decisions in real estate by integrating theoretical foundations with behavioural factors. The relevance of the research is driven by the growing complexity of investment decision-making under conditions of information asymmetry, heterogeneous market participants, and the institutional specifics of emerging economies. The paper analyses classical financial indicators (NPV, IRR, PI, ROR) and highlights their limitations when behavioural biases are not considered. Using the VIKOR method with probabilistic linguistic term sets, the study demonstrates that changes in behavioural preferences may lead to a 2–4-fold shift in the evaluation of investment alternatives.

Key determinants of investment decisions are systematized, including rational and behavioural components, macroeconomic and institutional conditions, market segmentation, technological innovations, and investor typology. Special attention is given to the characteristics of the Balkan region, particularly Serbia, where data insufficiency and post-socialist institutional legacy create additional challenges for investment analysis.

The findings expand the theoretical understanding of behavioural influences in real estate investment and illustrate the importance of investor heterogeneity for project evaluation. From a practical perspective, the results indicate that investors, banks, and policymakers can improve project selection and credit risk assessment by integrating behavioural analysis with mul-ti-criteria decision-making tools such as VIKOR. The study is limited using hypothetical project data, methodological constraints of the VIKOR approach, and market-specific conditions. Nevertheless, the results provide a foundation for enhancing data trans-parency, strengthening institutional frameworks, and incorporating behavioural preferences into investment decision-making in emerging real estate markets.

Downloads

Download data is not yet available.

References

Balakhnin, A. M. (2023). Tools for analyzing the development of the russian residential real estate market in modern economic conditions. Progressivnaya ekonomika, 12. https://doi.org/10.54861/27131211_2023_12_52

Gareev, I. F., & Akhmetgaliev, T. A. (2024). Razvitie metodologii otsenki ob’ektov nedvizhimosti s ispol’zovaniem retrospektivnogo metoda korrelyatsionno-regressionnoy zavisimosti. Real Estate: Economics, Management, 1, 36–42. https://doi.org/10.22337/2073-8412-2024-1-36-42

Grabovyy, K. P., & Fedorov, M. V. (2021). Key approaches to determining the effectiveness of marginal investments in specialized real estate. Ekonomika i predprinimatel’stvo, 2(127), 1466–1470. https://doi.org/10.34925/eip.2021.127.2.298

Zakrevskaya, E. A., & Detkova, M. E. (2018). Perspektivy primeneniya metoda realʹnykh optsionov dlya opredeleniya optimalʹnogo momenta investirovaniya. Fundamentalʹnye issledovaniya, (6), 122–126. https://fundamental-research.ru/ru/article/view?id=42178

Agava, Y., Bello, N., & Dairo, O. (2021). A review of studies on real estate investment performance in Nigeria. International Journal of Real Estate Studies. https://doi.org/10.11113/intrest.v15n2.126

Anelli, D., & Tajani, F. (2023). Spatial decision support systems for effective ex-ante risk evaluation: An innovative model for improving the real estate redevelopment processes. Land Use Policy. https://doi.org/10.1016/j.landusepol.2023.106595

Chuweni, N. N., Saraf, M. H. M., & Fauzi, N. (2022). Motivations for green real estate investments in residential properties: A review. Pertanika Journal of Social Sciences and Humanities. https://doi.org/10.47836/pjssh.30.3.04

Di Liddo, F., Anelli, D., Morano, P., & Tajani, F. (2023). The impacts of COVID-19 on real estate market dynamics: A systematic literature review of emerging trends. Buildings. https://doi.org/10.3390/buildings13092334

Emmanuel, M. K., & Chengelela, B. J. (2024). Trend of foreign direct investment in Tanzania’s real estate industry from 2000 - 2020: A systematic review. Asian Journal of Economics, Business and Accounting. https://doi.org/10.9734/ajeba/2024/v24i61382

Hatem, B. S. (2016). Factors explaining firm investment: An international comparison. International Business Research, 9, 112–120. https://doi.org/10.5539/ibr.v9n3p112

Huang, H., & Siraj, S. (2024). Quantifying and reducing the complexity of multi-line charts as a visual aid in multi-criteria decision-making. Annals of Operations Research. https://doi.org/10.1007/s10479-024-06090-6

Joyce, J. (2020). An analysis of central drivers of REIT returns. TCU Business Review, 5. https://doi.org/10.18776/tcu/br/5/127

Kwakye, B., & Haw, C. (2020). Interplay of the macroeconomy and real estate: Systematic review of literature. International Journal of Economics and Financial Issues, 10, 262–271. https://doi.org/10.32479/ijefi.10368

Locurcio, M., Tajani, F., Morano, P., & Anelli, D. (2020). A multi-criteria decision analysis for the assessment of the real estate credit risks. Appraisal and Valuation. https://doi.org/10.1007/978-3-030-49579-4_22

Machala, B., & Koelemaij, J. (2019). Post-socialist urban futures: Decision-making dynamics behind large-scale urban waterfront development in Belgrade and Bratislava. Urban Planning. https://doi.org/10.17645/up.v4i4.2261

Muminović, E., Radosavljević, U., & Beganović, D. (2020). Strategic planning and management model for the regeneration of historic urban landscapes: The case of historic center of Novi Pazar in Serbia. Sustainability, 12, 1323. https://doi.org/10.3390/su12041323

Naeem, N., Rana, I. A., & Nasir, A. R. (2023). Digital real estate: A review of the technologies and tools transforming the industry and society. Smart Construction and Sustainable Cities, 1. https://doi.org/10.1007/s44268-023-00016-0

Oluwumni, A. (2023). Leveraging on blockchain technology for the sustainability of real estate practice: A systematic review. Journal of African Real Estate Research. https://doi.org/10.15641/jarer.v8i1.1345

Özogul, S., & Taşan-Kok, T. (2020). One and the same? A systematic literature review of residential property investor types. Journal of Planning Literature, 35, 475–494. https://doi.org/10.1177/0885412220944919

Popović, G., Stanujkić, D., & Karabašević, D. (2019). A framework for the evaluation of hotel property development projects. International Journal of Strategic Property Management. https://doi.org/10.3846/ijspm.2019.7435

Popović, M. (2015). Data sources for the purpose of decision making in real estate investment analysis in the territory of Kragujevac city. Građevinar, 03, 16–25. https://doi.org/10.14438/gn.2015.04

Puška, A., Beganović, A., & Šadić, S. (2017). Impact of subjective judgment of decision makers on an investment decision. Serbian Journal of Engineering Management, 2, 1–13. https://doi.org/10.5937/sjem1702001p

Rahmawati, Y., Sari, A. F., & Utomo, C. (2023). The effect of consequences in utilizing real estate investment trust (REIT) on property development. International Journal on Advanced Science, Engineering and Information Technology. https://doi.org/10.18517/ijaseit.13.1.16275

Saari, A., Junnila, S., & Vimpari, J. (2022). Blockchain’s grand promise for the real estate sector: A systematic review. Applied Sciences. https://doi.org/10.3390/app122311940

Saari, A., Vimpari, J., & Junnila, S. (2022). Blockchain in real estate: Recent developments and empirical applications. Land Use Policy. https://doi.org/10.1016/j.landusepol.2022.106334

Shtefan, M., & Elizarova, J. (2018). Investment project efficiency and risk evaluation: An integrated approach. Business Informatics. https://doi.org/10.17323/1998-0663.2018.4.54.65

Singh, A., Kumar, S., Goel, U., & Johri, A. (2023). Behavioural biases in real estate investment: A literature review and future research agenda. Humanities and Social Sciences Communications, 10, 1–17. https://doi.org/10.1057/s41599-023-02366-7

Smith, K. A., Mostafiz, R. B., Friedland, C., & Nahmens, I. (2025). Bibliometric web of science and google trends analysis of multi-criteria decision analysis within the built environment. Frontiers in Built Environment. https://doi.org/10.3389/fbuil.2025.1528895

Thai-Phuong, T. (2025). A novel approach to risk assessment and investment efficiency evaluation for commercial mixed-use condominium projects in emerging markets: A case study of Vietnam. Journal of Information Systems Engineering and Management. https://doi.org/10.52783/jisem.v10i44s.8613

Xu, X., Zhang, Y., Xu, Z., Liao, H., & Tong, Z. (2024). Multi-attribute decision making based on VIKOR with probabilistic linguistic term sets: An application to the risk evaluation of foreign direct investment. PLOS ONE, 19. https://doi.org/10.1371/journal.pone.0294758

Zhao, C., & Liu, F. (2023). Impact of housing policies on the real estate market - systematic literature review. Heliyon, 9. https://doi.org/10.1016/j.heliyon.2023.e20704