Real estate, alternative real assets and other diversions

Improving Numeracy on Real Estate Courses Numeracy is only one of many desirable attributes for students studying Real Estate

The Professor

An old adage had it that “no-one got into Real Estate because they were good at maths”. If it was ever true that you didn’t need good numeracy skills in the property industry, it certainly isn’t now and one of the major challenges currently facing some university Real Estate courses is the number of students who need support in this area.

Prospective students need at least a Grade C in GCSE Maths to be offered place on our course but experience shows that this is sometimes an unreliable indicator of numeracy. It’s not clear whether the problem is due to the type of maths teaching at schools or because those with numeracy issues are disproportionately attracted to studying Real Estate. The simple answer would appear to be to raise the entry qualification to Grade B or even A, at GCSE Maths. This could negatively affect applications to Real Estate degree programmes and as numeracy is only one of a range of many desirable student attributes, the property industry does not want to select future professionals on the strength of a single criterion. So whatever the cause of the problem, universities need to ensure that all students are able to tackle those Real Estate tasks which have a computational element.

In most universities, additional numeracy support is provided on a voluntary participation basis. Students who meet the entry requirements for a degree programme cannot be compelled to undertake additional study in maths (or any subject), outside the programme to improve their skills.

At my University, all students take a Real Estate focused numeracy test during our Year 1 Induction Week to assess their numerical skills; there is no calculus involved! We test their ability to compute areas of irregular shapes, work with decimals, fractions and percentages and handle algebra to look at powers and roots of numbers. On the basis of the results of this test, students may then be advised to make use of the support classes at the University. These services are open to any student at any time and provide additional help with any aspect of study skills, including maths.

Valuation is a defining skill of many Chartered Surveyors. It is also a core topic for Real Estate students and one which is studied through all three years of our degree programme. Yet it is also the most problematic for students with improving numeracy skills.

In business, dedicated software does much of the hard work of valuation but in order to develop core skills, we still teach students to work with valuation formulae ‘on paper’ or in conjunction with spreadsheets. It is important to grasp the principles of valuation as only then can they move on to learning how to weigh-up evidence and apply judgement in reaching a conclusion. Valuation is, after all, an art as well as a science. At university, good comparables are always readily to-hand in valuation problems and, usually, only the maths can get in the way of finding a solution. In professional practice, the main problem is often not with the calculations but in finding suitable comparables and applying reasoned, professional judgement to what can be incomplete evidence.

The Professor

About Mike Patrick

Mike Patrick

Mike Patrick is a chartered surveyor with over 30 years’ experience in the real estate fund management industry in the UK and Canada. He has an MBA from the Cranfield School of Management and since 2008 has been lecturing in valuation and investment at Oxford Brookes University. Prior to joining Brookes he had held roles with a number of major fund managers including Henderson, Legal & General, Morgan Grenfell, Grosvenor and CSFB.

Articles by Mike Patrick

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