Conversions Strategies in Development Projects
A dynamic and volatile market can often adversely effect developments being built for specific purposes e.g. hotel and restaurant properties may find themselves economically unviable due to contextual turnovers.
Often such instances may be temporary setbacks but what if they had longlasting change in consumer behaviour? Possibly reducing footfalls in malls or occupancy of hotels of certain types or certain regions? Such instances are not to be taken lightly and it is best to plan for various scenarios to minimize dilution of value of the asset.
Rodschinson Investment’s team is comprised of specialists across industries and, together with global thought leaders, help clients navigate economic cycles and unique situations. The team follows a methodical approach wherein they combine understanding of economic cycles with insights of industrial trends to narrow down future scenarios and recommend suitable conversion solutions for client assets.
While a project under development offers a wider range of conversion strategies, a small miscalculation can lead to piling up of avoidable costs and time loss in case further conversion has to be done on the earlier conversion strategy. It becomes imperative that a thorough examination and evaluation of technical, regulatory, financial and other development specific aspects are taken into consideration for forming a strategy to optimize return / yield on the project.
Some examples of successful conversion strategies in adverse situations include
seeing falling sales due to the declining tourism in the region was repurposed into a senior living facility. a Repurposed business model from rooms to beds allowed to stabilize revenues and spread fixed costs across higher inventory.
A Sports club
primarily consisting of a mix of indoor and outdoor facilities, was seeing lower RoI given the high cost of maintenance of the facilities was suggested renovating to a high street commercial complex to take advantage of its location and stabilize yields.
A seasonal business of event spaces
would stabilize revenues by converting into residential dormitories for students during academic semesters.
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