How confident are you with your shopping centre valuation?

Traditional DCF (Discounted Cash Flow) models give you a single number. Reassuring, precise, but incomplete as a picture of risk.

If you're managing a neighbourhood shopping centre with a few units, a "base case" forecast feels manageable. But even at this scale, the variables multiply fast: break clauses, void periods, rent reviews, service charge shortfalls, tenant covenant strength. A single-line projection can't capture how all of these variables interact.

The problem with single-point forecasts

Standard valuations assume fixed inputs: one inflation rate, one void period, one outcome per lease event. Reality is messier. What if two tenants hit break clauses in the same quarter? What if energy costs spike just as you're trying to re-let?

Monte Carlo simulation has been standard practice in other areas of finance for decades. For example in derivatives pricing, mortgage-backed securities and insurance portfolios. Yet real estate has been slower to adopt it widely, particularly for small or mid-market assets, with many investors still relying on static DCF models or limited scenario analysis that can't account for the full range of uncertainty.

A different approach

Monte Carlo simulation replaces single assumptions with probability distributions. Run thousands of trials - each sampling randomly from realistic ranges - and you get not one NPV (Net Present Value) but a distribution of outcomes.

This lets you ask better questions: What does the worst 5% look like? What's the probability of achieving your target IRR (Internal Rate of Return)? How confident can you really be?

Ocupado: making this accessible

We've built a risk analysis system called Ocupado to bring this capability to smaller, complex assets. The video below shows it running on a hypothetical eight-unit shopping centre. Watch the bell curve build in real time as it runs thousands of simulations, generating a distribution of thousands of possible outcomes. You'll see the expected return over ten years, plus confidence bands at one standard deviation either side.

Ocupado can also integrate spatial risk factors - catchment demographics and accessibility analysis - alongside macroeconomic indicators, giving you a richer picture of the external forces acting on your asset.

We work with asset management teams to build bespoke models using your own data including lease terms, tenant risk profiles, and local market assumptions. Our approach is flexible: whether you need a one-off stress test for a single asset or ongoing analysis across a portfolio, we can tailor the engagement to fit.

If you'd like to explore what probabilistic modelling could reveal about your assets, get in touch.

See Ocupado's risk analysis in action in this video

Click the fullscreen button for best viewing.