Decision Support Mechanism for Risk Allocation in Private Real Estate Purchase Agreements
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Date
2016-10
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Addis Ababa University
Abstract
Real estate development is considered as one of the sectors with transaction of billions of Birr in
the Ethiopian market. Real estate development contributes to the economy of the country and in
alleviating housing problems. However, the sector is facing different problems. Problems that exist
in real estate development make the business environment susceptible to uncertainty. Therefore,
this research is aimed at identifying risk factors in private real estate development projects and
their impact on project objectives, examining the current practice of risk allocation in real estate
purchase agreements and providing a practical mechanism that can be used by real estate
developers to allocate risks properly. Risks were identified and impact analysis was conducted.
Subsequently, residential real estate purchase contracts were reviewed and it was found that most
of the reviewed agreements do not include the severe risk factors. Purchase agreements currently
being used lack completeness in addition to risks being misallocated. It is believed the decision
support mechanism provided helps real estate developers make proper risk allocation decisions.
Key words: Decision support mechanism, Purchase agreement, Real estate, Risk, Risk allocation,
Risk allocation principles, Risk impact.
Description
Keywords
Decision support mechanism, Purchase agreement, Real estate, Risk, Risk allocation, Risk allocation principles, Risk impact