Growth Strategies of Real Estate Companies in a Mature Market

Literature on corporations shows a strong interest in strategies, the way these are implemented and the effectiveness of the applied instruments. Notably Ansoff, Hewlett, Kim/Mauborgne and Porter have launched interesting concepts as to what type of strategies can be differentiated and under what conditions these concepts prove to be viable. The applicability of those concepts have until now been limited to large listed mostly manufacturing companies. Little evidence is available that these concepts are also valid in the real estate industry. The latter is responsible for a considerable share in national employment. Therefore, more insight in type and motivations of strategies followed could enhance knowledge about a decisive element of this industry The objective of this paper is to present the findings on growth strategies based on interviews with managing directors of 30 medium sized real estate companies in The Netherlands. In accordance with accepted theoretical notions from authors mentioned corporate strategies have been divided into competition strategies, growth strategies and development strategies. Competition strategies concern the way companies try to be unique or different from their competitors through the emphasis on cost leadership, differentiation or focus Growth strategies deal with the alternatives companies should select when growth or continuity is their main aim. Those alternatives are fourfold : market penetration, market development, product development and diversification. Market has been confined to the geographical dimension Development strategies deal with the way companies has implemented the selected growth strategy. Three alternatives are at hand : internal development, acquisition and cooperation Two groups of companies have been approached for this purpose. One group comprises real estate developers, partly independent, partly affiliated to financial or construction firms. The other group comprises housing corporations which deploy development activities since 1995. The results reflect interesting differences and similarities. Not only in time (past,present,future) but also between the various groups (developers vs housing corporations). Path dependency is unmistakenly recognizable which can be traced back a.o. to the expertise and interest of the management The organization of this paper has the following structure. At first relevant literature is presented (part 1), then the research design will be explained (part 2), results derived from interviews and annual reports will be presented (part 3). Conclusions and directions for future research are reported in part 4.