Such collaboration and coordination between stakeholders should reject the silo perspective that is nowadays common. Planned sustainable cities, like those in the Middle East, are models for a new approach to the real estate value chain, according to an article published by the INSEAD business school.
Real estate is divided into three markets:
- land ownership itself
- the primary market which plans and creates buildings
- the secondary market which turns properties into homes and offices
The real estate value chain starts with a landowner, who sells land to a developer who divides the land into plots and builds the urban infrastructure. Sub-developers then buy plots and build assets on them; these are later sold to customers. Customers then sell or rent properties to end-consumers on the secondary market. At each transfer of ownership, new ROI criteria are defined.
End-to-end thinking would bring more value
Large real estate companies which are involved in multiple stages of the value chain know that investing in overall design often improves the efficiency of its maintenance operations. That means that capital expenditure (CAPEX) spent on thoughtful design significantly lowers operating expenses (OPEX).
More value could be achieved if digital tools were to be employed from the very beginning when urban development project are drafted. The full life cycle of all its assets should be also considered.
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