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Strategies for real estate - A primer on various real estate activities

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  1. 1. Strategies for Real Estate A primer on various real estate activities Prashant Das Head of R&D | Partner
  2. 2. Objective Introduction PART-I: Corporate Real Estate Strategies PART-II: Service Provider Strategies PART-III: Real Estate Company strategies
  3. 3. PART-ICorporate Real Estate Real estate owned by corporate has traditionally been one of the largest asset components. Annual spending on a company’s real estate may vary from two to more than 10 percent of the total revenue
  4. 4. CRE: The Finance’s view Why is Finance team interested? Savings on all other fronts of business such as sourcing, business process redesign etc have been extracted already CFO’s role has expanded up to the level of strategic planning
  5. 5. Typical Corporate Strategies Integration of real estate and corporate strategy Centralizing Real Estate Functions Leveraging technology Outsourcing real estate
  6. 6. Cornell Balanced Real Estate Assessment model (COBRA) The model considers the following attributes Community Impact, Architectural Branding, Building Adaptability, Defined Boundaries, Regional Economic Volatility . Net Income Per Employee (“NIPE”) Uncertainty Analyses, Risk-Reward Analyses Monte Carlo Analysis
  7. 7. PART-IIService Provider Strategies Strategic Approach Needs assessment Specification of service offering Compensation arrangements and pricing level Market segment coverage—geography, property type, scale, financing form, etc. Form of work product deliverable
  8. 8. Service Provider Strategies Competitive Differentiation Cost Service Expertise Market coverage Prestige Strength (deep pockets) Risk allocation between client and service provider One-stop shopping Scale/Size Focus/Specialization 
  9. 9. Service Provider Strategies Initiative to Stimulate Demand General—i.e., You should invest in real estate because . . . Service—i.e., You should have an independent due-diligence analysis because . . . Type of service provider—i.e., You should retain a firm with these qualifications . . . Specific company—i.e., You should work with our company because . . . Transaction—i.e., You should retain us for this specific transaction because . . . Contract terms—i.e., You should retain us to provide these services on these terms because . . . Ongoing support—i.e., You can count on us to help you on an ongoing basis . . .
  10. 10. PART-III Development Company Strategies Need for a Real Estate (Development) Company to strategize Changing Economic and Real Estate Environments: A looming shift between phases of the real estate Changes in Ownership and/or Leadership: Either an orderly or traumatic shift in key leadership Mergers and Acquisitions: Every aspect of a company’s strategy Tremendous Growth: Complete structure of the organization Challenges to Growth: Reposition, expansion, diversification, or rationalization Legacy Vision: desire to create a long-term vision and lasting legacy for good and bad times
  11. 11. http://www.realism.ineLearning | Research | Real Estate | India