Project: Development of an aged residential area, TVT Buildings (TVT Asunnot Oy). TVT is a real estate company owned by the city of Turku. The company’s real estate stock consists of over 11,000 apartments.
Demand: The feasibility analysis of real estate development alternatives for an aged residential area
Offering by Boost Brothers: Project development
The development needs of an aged residential building are usually created from the change of regional market condition and demand factors as well as from a growing renovation need for the buildings. A typical sign is a decline in the utilization rate of rental homes and therefore a decrease in rental income. Analyzing the profitability of possible development alternatives is an essential part of the development process, and it can be used to identify best possible solutions for the future.
The project development assignment derived from a recognized decrease in utilization rates in residential buildings that were in need of renovation operations.
Different real estate development alternatives were analyzed based on the financial impacts of a total renovation and a change of floor plans. In addition, the possibilities for changes in a purpose of use, demolition, and new construction were analyzed.
The analysis of the development alternatives was conducted by utilizing the real option approach developed by Boost Brothers. In the project, the real option approach was used for the first time in the development of residential areas.
The Real option approach enabled to identify which targets were profitable to renovate, which floor plans should be changed in order to make renovation worthwhile, which properties should be dismantled and what kind of new construction work should be executed. The results are utilized in a long-term development plan for the residential area.
“Working with Boost Brothers was rewarding and efficient”, stated Johannes Malmi, the development manager of TVT.