‘Location, location, location’ - Real Estate development in distant locales

Real estate has always been a local business. Developers have been accustomed to supreme knowledge of their local markets and target asset classes. According to the old familiar adage, the three keys to success in real estate development are location, location, location! But times have changed and continue to change, rapidly.

With the world not yet recovered from the 2008 collapse of global financial markets, the typical development cycle has been altered. Economic headwinds continue to dampen economic growth, affecting the end users of real estate assets and altering the supply and demand equation in the marketplace. Meanwhile geopolitical and socioeconomic volatility and uncertainty present extraordinary risks, particularly for foreign investment.

At the same time, technology and unstoppable demographic trends are changing the very nature of supply chains, workforces and workplaces. All of this increasingly adds complexity to real estate investment decisions, and the process of delivering the real estate assets that form the built environment.

In this turbulence lies opportunity. Developers seeking profitability and growth amidst this changing business landscape are looking at new avenues. While ‘location, location, location’ remains paramount, many developers are now venturing into markets far from their ‘locale’ - or asset classes outside of their traditional comfort zones.

While ‘location’ remains the most critical success factor, the critical challenge is knowing and selecting the ‘right location’ beyond familiar territory.  Expansion into new geographies and markets presents huge opportunity for developers together with the challenges and risks of operating far from historical power bases and supply chain relationships. Developers must acquire knowledge of unfamiliar markets and target asset classes.  They also need local presence to position themselves to carve out market share and firmly establish their brands.

This is no easy feat.  The good news is that developers do not have to face the challenge of building real estate away from their local markets alone. They can look to partner with program management firms, like Arcadis, with large global footprints, deep working knowledge of the real estate development business, and strong presence in major markets. This way, developers can leverage outsourced talent with strong knowledge of the local stakeholders and supply chains to ensure they develop the right strategies, manage the risks, and assure the outcomes of their programs – no matter the location.

All courses of action are risky, so prudence is not avoiding danger (it’s impossible), but calculating risk and acting decisively.” - Niccolo Machiavelli

Edel Christie

Managing Director, Buildings Ask me a question
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