Archives For Risk

real estate market volatility

In the post, Can Money Alone Develop A City Overnight?, Jiwa Studio raises a very important green field master planning issue I’ve not seen addressed in any satisfactory way – how much, how soon, where to begin? That is, how much development density should there, how soon would that realistically come online and where’s the best location to start building from. Continue Reading…

Bintan Risk Hotel Investment

Continue Reading…

Alila Bintan Master Plan

Continue Reading…

Resort Hotel Development Risk

Continue Reading…

Hotel Development Risk

Over the past many years I’ve witnessed hotel owners scouting to purchase existing hotel properties in a new resort location. Mind you these owners represent large property groups. They’ve got the financial muscle and experience to develop hotels from ground up. But the thing is, they don’t!

Continue Reading…

Real estate developers, especially the big boys, avoid developing in greenfield locations like a plague. Unless nudged by governments or a key shareholder with foresight they’d rather let someone else be the pioneer.  Why? It’s too damn risky! They’d rather stay within proven markets. It’s never about the money. It’s always the risk associated with the investment.

Continue Reading…

Sensitivity Analysis and Monte Carlo Simulations are methods you use in your financial feasibility study to see how a change in input affect the financial output measures.  Continue Reading…

Operations Risk

Andrew  —  October 27, 2011 — 1 Comment

In the Operations Phase there are three main aspects to Risks – Physical Asset, Marketing and Service.  All these 3 components will have direct impact on business cash flow, either in regards to generating revenue and or operating costs.

Physical Asset

Usually when one thinks of a development going into operations immediately they identify the need to do maintenance on the physical property.  This includes the daily cleaning to making sure the mechanical systems are in good working order and undergo the required periodic servicing.

Marketing

Operations phase marketing is primarily for income properties.  Depending on the type of property it can be firstly the marketing to attract the right tenants so the overall mix is correct and hence attractive to consumers.  The additional marketing involves the marketing directly to consumers, which could also include the running of special events and promotions.

Service

In all development operations there is an interface with users / consumers.  Sometime it is the human element of a development that people remember most in a positive or negative way. Well trained employees can are the frontline to managing operations risks with the general public.

This is the last brief in the series of identifying Overall Development Risks.  In a future post we shall cover the risk management methods for each part.

This post is contributed by Jiwa Studio.

Development Execution Risks

Andrew  —  October 17, 2011 — 1 Comment

In the Development Execution Phase there are three main aspects to Risks – Cost, Time and Quality.

Cost Risks
It’s not unusual for projects to go over budget. Unforseen conditions and variations from original plans are common. For example, unforseen conditions can include below ground conditions that were previously not picked up during the geotechnical survey. The can also be as a result of the way a contract is written which may allow for fluctuations of certain products depending on “market price”.

Time Risks
There’s always a possibility of time delay due to weather, labour issues, site coordination and other contractor delays. In addition the risks can come from the production of construction documents as well as the coordination of the construction documents which may lead to the amount of clarifications required.

Quality Risk
The quality of a finished project can be due to the quality of the design itself or contractors not building to specifications designed by the architect, engineer, landscape designer interior designer.

In the next post we shall cover Operations Risk  and after that address risk management methods.

This post is contributed by Jiwa Studio.

Overall Development Risks

Andrew  —  October 17, 2011 — 1 Comment

Continue Reading…