Exploring Profitability: A Preliminary Study on Real Estate Developers' Reactions to Market Pressures

Marianne Wyrwoll and Elisabeth Beusker

ERES from European Real Estate Society (ERES)

Abstract: The escalating costs associated with construction and financing, coupled with increasingly stringent legal and regulatory requirements, exert substantial pressure on real estate development companies. Consequently, a discernible surge in insolvency rates has been observed within the real estate development sector. This study aims to systematically investigate the adaptive strategies employed by real estate developers in response to the challenging market conditions, specifically focusing on alterations in their profitability analyses. An online survey was conducted among real estate developers based in Germany. The survey considered different types of real estate developers, company sizes, and asset classes. The results suggest that there have been changes in the way real estate developers view profitability, particularly in their choice of profitability indicators. Influential factors include both external factors, such as regulatory changes and crises, and internal factors, such as personnel changes within the company.

Keywords: market pressure; profitability analysis; Real Estate Development (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2024-01-01
New Economics Papers: this item is included in nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2024-122

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