Insight: REIBC blog
Advancing the conversation on land and real estate issues in BC.

Insight: REIBC blog > Risk and Return

Risk and Return

posted on 10:06 AM, January 4, 2019

Everyone wants to make money, but relatively few choose real estate development as their tool. Why? It could be the level of risk.

“Like most businesses, the successful development of real estate must result in a financial return acceptable to the developer,” says Perry Staniscia of Southfork Developments and In the Black Advisors Group. “Although conducting business in all sectors has risk, the development of real estate poses higher risk relative to some other businesses due to the length of time associated with bringing projects to market along with many variables beyond the control of the developer.”

With this kind of risk involved, what measures can developers take to see a return on their investments? Staniscia notes that although higher returns are possible and are “usually expected to compensate for this higher risk,” such returns are not guaranteed, and it is the marketplace that holds the power. “Successful developers should have a good read of the marketplace and must be able to mitigate risk. A sound financial feasibility assessment, development plan, and insurance strategy are essential in determining whether the development of a project should proceed.”

Ultimately, experience wins the round. “Although no one has a crystal ball,” says Staniscia, “experienced developers are able to make money in both strong and weak markets due to their ability to adapt quickly to factors beyond their control.”

Input Fall 2018.jpg
Download Fall 2018

Read more in Staniscia’s “Financial Feasibility Assessment, Insurance, and Development Plan” in the Fall 2018 edition of Input. Download Fall 2018

Join the conversation on Facebook

Recent Articles

Risk and Return posted on 10:06 AM, January 4, 2019 in Insight: REIBC blog

Evaluating the Big Idea posted on 10:03 AM, December 14, 2018 in Insight: REIBC blog

Managing Business Risk posted on 10:19 AM, October 26, 2018 in Insight: REIBC blog

Getting Connected, Staying Connected posted on 11:58 AM, September 28, 2018 in Insight: REIBC blog

A Technological Revolution posted on 9:29 AM, August 31, 2018 in Insight: REIBC blog

Global Approaches to Non-resident Property Ownership posted on 10:34 AM, June 22, 2018 in Insight: REIBC blog

What Does Australia Do? posted on 11:05 AM, June 1, 2018 in Insight: REIBC blog

Addressing Housing Affordability Through Legislation posted on 11:23 AM, May 11, 2018 in Insight: REIBC blog

Local Success, Not Foreign Buyers posted on 2:35 PM, April 20, 2018 in Insight: REIBC blog

Surrey’s All Grown Up posted on 10:36 AM, March 9, 2018 in Insight: REIBC blog