A Research Proposal on Real Estate Development Risk and Its Implication for Project Viability in the Port Harcourt Metropolis
CHAPTER ONE
Objectives of the Study
The study aims to achieve the following objectives:
- To identify the key risks associated with real estate development in the Port Harcourt metropolis.
- To assess the implications of these risks on the viability of real estate projects in the region.
- To recommend strategies for mitigating identified risks and enhancing project viability in Port Harcourt’s real estate sector.
CHAPTER TWO
Literature Review
Real Estate Development
Real estate development encompasses a multifaceted process involving various stages and components (Beswick et al., 2022). At its core, it involves the identification of suitable land or properties, followed by feasibility studies to assess the viability of proposed developments (Ballard & Harrison, 2020). This initial phase requires thorough market research and financial analysis to determine the potential return on investment and mitigate risks associated with the project (McKenzie & Atkinson, 2020). Once the feasibility of the project is established, developers proceed with securing financing, obtaining necessary approvals, and managing the construction process (Ferm & Raco, 2020).
The process of real estate development also involves collaboration with various stakeholders, including architects, engineers, contractors, and regulatory authorities (Lascoumes & Le Galès, 2021). Each stakeholder plays a crucial role in different stages of the development process, from designing and planning to construction and project management (Guironnet et al., 2019). Effective communication and coordination among these stakeholders are essential for ensuring the successful execution of real estate projects (Raco et al., 2018).
Moreover, real estate development is influenced by a myriad of external factors, including economic conditions, market trends, and government policies (Brill & Durrant, 2021). Changes in interest rates, inflation rates, and consumer preferences can impact the demand for real estate and affect the feasibility of development projects (Colenutt, 2020). Additionally, regulatory frameworks, zoning ordinances, and environmental regulations can shape the scope and scale of development activities in a given area (Heslop & Ormerod, 2020). Therefore, developers must navigate these external factors effectively to mitigate risks and capitalize on opportunities in the real estate market (Gallent et al., 2018).
Risk Management in Real Estate
Risk management is a crucial aspect of real estate development, involving the identification, assessment, and mitigation of potential risks throughout the project lifecycle (Bradley, 2021). In the real estate context, risks can arise from various sources, including market fluctuations, regulatory changes, and construction delays (Gallent et al., 2021). Therefore, developers employ various strategies and approaches to manage these risks effectively and protect their investments.
One key concept in real estate risk management is diversification, which involves spreading investment across different assets or projects to reduce overall risk exposure (Anselmi & Vicari, 2020). By diversifying their portfolios, developers can minimize the impact of adverse events on their investments and improve overall resilience to market fluctuations (Brill & Butcher, 2020). Additionally, diversification allows developers to capitalize on opportunities in different market segments and geographic locations, further enhancing their risk-adjusted returns (Charney, 2021).
Another important approach to real estate risk management is contingency planning, which involves anticipating potential risks and developing strategies to mitigate their impact (Department for Communities and Local Government, 2032). This proactive approach allows developers to respond quickly to unforeseen events and minimize disruptions to project timelines and budgets (Herbert & Murray, 2021). Contingency planning may include setting aside reserve funds, establishing alternative supply chains, or securing backup financing arrangements to address unexpected challenges (Imrie & Street, 2019).
Furthermore, developers often utilize risk assessment tools and techniques to evaluate the likelihood and potential impact of various risks on their projects (Mosselson, 2020). These may include quantitative methods such as sensitivity analysis, scenario planning, and Monte Carlo simulations, as well as qualitative approaches such as risk workshops and expert judgment (Paccoud & Mace, 2018). By systematically assessing risks and their potential consequences, developers can prioritize risk mitigation efforts and allocate resources more effectively (Raco et al., 2022).
CHAPTER THREE
Methodology
This section outlines the methodology employed in the study, focusing on research design, population, sampling technique and sample size determination, sources and methods of data collection, data analysis, validity and reliability assessment, and ethical considerations. The methodology provides a systematic framework for conducting the research and ensures the reliability and validity of the findings.
Research Design
The research design encompasses the overall plan for conducting the study and encompasses both quantitative and qualitative components. The study will utilize a quantitative survey research design to gather data on real estate development risks and their implications for project viability in Port Harcourt. This design allows for the collection of structured data from a large sample of respondents, facilitating statistical analysis and generalizability of findings (Saunders et al., 2019).
Population of the Study
The target population for this study will comprise individuals involved in real estate development activities in Port Harcourt. This includes real estate developers, investors, policymakers, and other stakeholders in the real estate sector. The justification for targeting this population of 1200 respondents lies in its representation of key actors whose insights are crucial for understanding the dynamics of real estate development and its associated risks in the study area.
Sampling Technique and Sample Size
For this study, a purposive sample of 120 respondents representing 10% of the target population will be adopted. The use of purposive sampling ensures that participants are selected based on specific criteria relevant to the research objectives, allowing for the inclusion of individuals with valuable insights into the phenomenon under investigation.
References
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- Anselmi, G., & Vicari, S. (2020). Milan makes it to the big leagues: A financialized growth machine at work. European Urban and Regional Studies, 27(2), 106–124.
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- Ballard, R., & Butcher, S. (2020). Comparing the relational work of developers. Environment and Planning A: Economy and Space, 52, 266–276.
- Ballard, R., & Harrison, P. (2020). Transnational urbanism interrupted: A Chinese developer’s attempts to secure approval to build the ‘New York of Africa’ at Modderfontein, Johannesburg. Environment and Planning A: Economy and Space, 52, 383–402.
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