Assessment and enhancement of decision-making models used for the pre-development stages of office developments in turkey

摘要

Real estate development involves many complex, dynamic, and uncertain elements. In the pre-development stage, greater uncertainties result from the fact that the space being considered has not yet been created. Considering both the inherent characteristics of the real estate and the inefficiency of the market it operates in, any aid in the investment decision process is believed to add to the quality of the end product. This being the case, most, if not all, of the development companies make office development decisions using some kind of a procedure in the pre-development stage. However low occupancy rates and long payback periods that are being faced, even by the most recently completed Class A office projects in Turkey, show that there are serious deficiencies in these applied procedures and that they lack the necessary and important components of project feasibility analysis, which are basically the market and financial feasibility analysis, that needs to be applied in the pre-development stage of the office development process. That is why this study??????s purpose is to explore and identify the deficiencies of the decision-making models currently used by Turkish real estate development companies in the pre-development stage of office development projects and to recommend necessary additions and/or deletions for the enhancement of these company models. To do so, this research involved interviews of ten office developers to identify their go/no-go decision processes in evaluating office developments in Istanbul, Turkey. The study has found that developers tend to fall under three different groups, each following different models: Group I includes exclusively construction companies, Group II includes mixed companies and Group III includes exclusively real estate investment companies. Furthermore, the research has found that similarities and differences among these three groups involve the following: While investment companies seek opportunities based on market research, decisions by construction companies are driven by the availability of land swaps. All three groups emphasize land availability and related title and land-use issues. Although unit-sale continues, there is a gradual shift to income property with the aid of improvement in the financial market, which is also reflected in the decision-making models being used.