Case Studies

Case Study 2 - Real estate sector feasibility study and business model

Industry: Real Estate Investment company

Client: Joint venture company between Middle East bank and Asian Sovereign Wealth fund.

Objective: To determine the best options for development of a large 240 acres site located in a strategic Asian location.

Results:

The joint venture was established between a private sector organization looking at short term profits and an exit strategy in the medium term on the one hand, and a government sovereign wealth fund, looking to achieve social objectives such as employment creation and a competitive edge over a neighbouring country, which are long term objectives. This created a substantial amount of tension at the Board level.

The client engaged us as independent consultants to determine best land use options, based on a prior study undertaken by a multinational and reputable firm of strategic consultants. Their recommendations were to be confirmed or adjusted as part of the scope of work for our engagement.

Based on extensive market research we were able to confirm the viability of land usage for logistics purposes, based both on secondary and primary research as well as by interviewing multinational players in this sector.

We were able to go one step further and confirm the projected requirements for logistics services and space requirements in this geographic area, by analyzing current demand compared with total GDP contributions from the logistics sector and projecting these out to 2025, in keeping with the sovereign wealth fund objectives, while at the same time developing a detailed hybrid scenario creating the option for a medium term return on investment and a viable exit strategy for the private sector partners.

Other matters we identified during the development of financial models and a business model for the JV company included strategic issues including

Need for improvement of security, both private and in the public domain. Primary research and interviews with dominant industry players identified this as a critical success factor in marketing and successfully developing the site. We proposed a strategy based on a public private partnership to ensure basic public services would be improved.

Integration of PR and Marketing efforts. Although there was much effort invested in marketing and public relations to bring the area and the opportunity to the attention of potential investors and operators, we found that there were up to 6 public agencies involved without any reasonable level of coordination, resulting in a lack of concrete results. We proposed a strategy for bringing the various private and public sectors together to ensure harmony and consistency in the marketing and PR activities, and to improve results from these activities.

The client was extremely pleased with the final reports incorporating all market research and conclusions, as well as recommendations, the quality of financial models and proposals and the business model proposed. The project was completed on time and within budget.

Lesson learnt:

The key role consensus building and communication plays in developing workable solutions in situations where there are very contrary requirements from different stakeholders.

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