Working on my PMA made me think of a lot of things concerning the real estate/property management as part of assets management. As I mentioned in a previous entry, there are some definitions of asset management that focus only on this category of management and consider literaly the word asset.
Many people choose to invest in asset management, and namely properties, as it can yield quite high returns. When it comes to companies it is a bit different. Companies have properties for two reason: operational and investement. And although the first may seem obvious, many companies fail to execute it appropriately resulting in high costs.
These costs involve not only maintenance costs as someone would think, but depriciation. And the second comes in mind of the finance department usually when it is the end of each fiscal year. For this reason, I firmly believe that companies need to reconsider their property portfolios regularly, so that they can utilize and exploite their assets to have the best returns possible.
good point that got me really thinking Ilektra! I think like say for example, may be Waverider should have been leasing out its Bourmouth property, rather than leaving it empty.
I think a lot of major corporations nowadays seriously invest or consider thoroughly about their property management. From what I know, McDonalds (in Australia at least), just rent or lease the land to build their shop. After several decades, it becomes theirs. Or Major supermarket chains in Thailand (Tesco and Carrefour – we’re so overtaken by the West!), buy some random land in the middle of nowhere. The land is so large that even when they build their complex, they still have free unused land surrounding them. And because these are in remote areas, the land nearby the supermarket increase in prices – due to the ‘civilization’ brought about to the rural communities by these supermarket and shopping complex. Guess what, Tesco just bought some cheap random land, build their supermarket, sell their products at a cost lower than the surrounding community markets, increase the price of the surrounding land (much of which they now own!), and SELL off those land.
This land selling or property side of what they do, arguably makes them almost sufficient money that it doesn’t really matter anymore whether the supermarket they built is profitable or surviving in the long term. They had already made a load of money through property selling!
Another thing is that major supermarkets in Australia – Woolworths and Coles, they often exist within various shopping complex/ villages. Now, most of the shops, say, in Westfield, would have to pay high rent. But Woolworths and Coles don’t have to! They argue that people (especially housewives) come to the shopping complex on a regular basis because of the grocery shopping they provide. Had there not been Coles or Woolworths or Aldi, the traffic to the shopping complex would be substantially lower. Hence, having them there can actually increase income for the overall of the shopping complex. Therefore, they manage their property quite well in a way – low costs, long term hold/ ownership/ lease.
All of these, from where I see, have made these giants even more profitable than they would otherwise be! So yes, your point is so so true! :)
06 Jun 2012, 17:01
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