Acceleration challenge or paralysis challenge?
More than 74 thousand new homes were build in the Netherlands in 2022. Thanks to the previous economic boom, we reached this relatively high number. Unfortunately, still not nearly enough to achieve the desired 100,000 homes. The market turned around in the second half of 2022. Which appears to be a fear of contracting in the area development market. Now, after the crisis of 2008-2013, a new paralysis threatens. But it's not just economic conditions that makes it difficult to accelerate.
Professional real estate operators, governments and policymakers have long talked about an acceleration challenge, but in reality it seems to be more of a paralysis challenge. In practice, there’s a lack of capacity to get (area) developments off the ground, resulting in a deterioration in quality due to limited knowledge and experience among municipalities and developers. There’s also a case of inefficient collaboration between different disciplines, where the so-called “hot potatoes” are passed around, and an accumulation of requirements, leading to delays and extra costs. Rising interest rates and high construction costs also have a negative impact on business cases and confidence in development work. To address these issues, there is a need for a change of approach and the creation of trust by taking crucial decisions early and using data-driven action. Setting up integrated project teams and establishing clear preconditions can help minimise risks and shorten the development process.
Real estate professionals, governments and policymakers have long talked about an acceleration challenge, but in reality, it seems to be more of a paralysis challenge. In our business, we see a lack of capacity combined with a shortage of experience and the necessary knowledge among municipalities and developers. Different disciplines do not work together efficiently, leading to prolonged development processes and the so-called “hot potatoes” are postponed. People attach great value to aesthetics, without important frameworks and preconditions being clear. Unintentionally, this often leads to problems in later phases, wasting a lot of time and money. Moreover, rising interest rates and high construction costs have a negative impact and cause additional delays.
To break this pattern, it is essential that clients take responsibility and make crucial decisions earlier in the process. To avoid passing these “hot potatoes” around, it’s important to take responsibility by creating your own conditions and having a clear framework for decision-making. This guarantees the feasibility of the business case and serves as a steering element for development. Setting up integrated project teams, establishing clear preconditions and minimising risks can help speed up the development process. Only then are these preconditions shared with designers to develop well-supported plans. On the front end, we ensure minimal risks for market participants by leveraging our experience and tooling. With the help of a Tender Test, we can assess the feasibility of projects and share them with market parties, taking into account all aspects of the development.