Strategies adopted by a property development firm to survive in an economic downturn

Abstract

This research paper addresses the question, ― What strategies can a property development firm adopt to survive in an economic downturn? The methodology used to answer the question was firstly researching the New Zealand economy over the economic downturn and more specifically the Auckland property market, and then interviewing a property development company to form a case study on the strategies they had in place and new strategies adopted to survive the recession.

This research topic is being looked at due to the large number of property development companies that went under in the recent economic downturn, so here we have identified strategies adopted by a company that managed effectively throughout the recession.

The literature and research found that companies’ strategies entering into a recession are as important as the strategies used to survive. The company researched entered the recession with clear strategies, management lines and risk management techniques in place so was positioned well when the recession occurred.

The key findings of this research paper identified the following strategies used to survive the economic downturn were:

• Reduction of operation costs • Keeping funding lines in place • Reducing debt exposure • Setting clear strategic goals • Shorter time frame developments • Specialising in preferred market • Growing other parts of the business to increase cash flow • Keeping risk strategies in place o Tenant risk – pre-commitment required o Construction costs – fixed lump sum price o End value – good market understanding