The old adage of ‘risk and reward’ can feel particularly pertinent when it comes to investing in real estate.

And it isn’t too much of a stetch to suggest that decisions taken at the start of a prospective investment can have the most profound effect on the eventual outcome.

Pre-investment strategy can be the difference between a profitable, commercial success and one which falls short of desired objectives.

A real estate development (be that residential, commercial or a combination of the two) may on the surface appear a success – running to budget, hitting deadlines, and designed to a quality specification – but these successes can be hollow and limited if the correct due diligence and vision has not been implemented from the outset.

Put simply, identifying high-value investment opportunities in real estate is an art and it is here, before a single contract is signed or a spade has made contact with the ground, that the profitability (or lack of) an investment is largely determined.

For an investment opportunity to pay dividends, here are five key aspects worth considering.

It seems logical, yet ill-thought-out projects can be undermined through a lack of thorough research from professionals who know what they are doing. This should be the bedrock that all good, commercially successful real estate investments is built upon.

A one-size-fits-all approach is not adequate. Consider the nuances of different locations which could affect value, analyse opportunities for profit and mitigate and flag any potential issues which may arise.

Real estate developments require significant financial commitment and intellectual capital and it’s crucial the objectives are clear from the outset and that all stakeholders involved are aligned to what success and ROI looks like.

This needs to be tangible and easily quantifiable. Consider, for example, the forecasted short, mid and long-term yield; the price per square foot and the value that would be added; and calculate income projections once the development is complete.

Real estate is complex and ever-changing. Developments – large and small – rely on an intricate network and eco-system of professionals from legal specialists, agents, contractors, planners, stakeholders and more.

Experience and talent counts for everything in this field and aligning with a professional, established and respected organisation that can bring all these facets together will go a long way to determining whether a real estate development achieves – or exceeds – the required ROI.

It’s tempting to focus on short term outcomes, but a longer-term approach is important in realising the ultimate potential of a development and ensuring an investment is maximised.

Amongst other considerations, be cognisant of the opportunity for resale further down the line, the scope for a phased expansion of a site upon completion and additional revenue opportunities.

Innovation has a significant role to play, and available technologies should aid the decision-making process.

Consider a 3D tour of a site if available to gain added insight and save time, money and resources on initial site visits (although these will clearly be imperative further on in the process).

Use all available data to understand more about the site, its history and its profile and use this insight to identify any potential challenges or, indeed, areas for potential added value.

Any real estate development is only as good as the decisions that precede it.

Zunikh brings a wealth of experience, expertise and the very best practitioners to identify and execute a wide range of real estate investment opportunities for clients and partners.

If you would like more information about Zunikh or anything featured in this article, contact us now.

By Sean Gough
Chief Commercial Officer