ABSTRACT
Purpose>Volatility, Uncertainty, Complexity and Ambiguity (VUCA) are terms the military have coined to describe the environment they often operate in. This paper examines how this decision-making framework can be used to better inform real estate investment and development. In celebration of this journal's 40th anniversary, we also explore how VUCA can be related to and expand on the teachings of Dr. James A. Graaskamp who published his seminal piece on the Fundamentals of Real Estate Development (1981) the same year. In that piece, he highlights the importance of paying attention to the human factor, the consumers of real estate.Design/methodology/approach>This is a thought piece on an alternative decision-making framework that can help capture the dynamic environment that commercial real estate investors and developers are currently working in. VUCA captures the difficulty of predicting the future in a world of accelerating, unpredictable change. This is particularly important in today's rapidly changing world caused not only by the current COVID-19 pandemic but also the exponential growth of the proptech industry as well as the increasing risks and opportunities associated with climate change that continues to impact the built environment.Findings>This is not a traditional research project with empirical findings. We are presenting an alternative framework for thinking about making investment decisions in these current volatile, uncertain, complex and ambiguous times today and in the future. In addition, the importance of multidisciplinary training and the human factor are stressed.Research limitations/implications>There are no limitations to this research as it is the ideas of the authors. Implications are to help real estate investors, developers and educators better understand the environment that they are working in.Practical implications>VUCA captures better the dynamic nature of real estate investments compared to traditional analysis. It helps one better analyze the risks and returns but also to acknowledge that there is a lot you cannot predict and there are many exogenous variables that can, at times, completely change the rules of the game. Flexibility and adaptability are essential tools for working in a VUCA environment. In addition, the human factor plays an increasingly important role and real estate investors and developers that clearly understand this and focus on the consumer will likely be more successful.Originality/value>We believe that this is the first time that VUCA has been used in the real estate academic literature.
ABSTRACT
Over the last two decades, the property bubble and the subsequent economic crisis and post-crisis policies have heightened urban inequalities, mainly in cities in southern Europe. The gaps between social classes have widened with the configuration of new urban spaces characterized by segregation and exclusion. Palma is the capital of one of the top tourist destinations in the Mediterranean (the Balearic Islands) and it is usually regarded as a successful tourism model and a land of opportunity for property investors. Nevertheless, serious problems of inequality exist in the city. The centre of this dual city is split between a process of spreading gentrification and the urban blight of its poor neighbourhoods. Son Gotleu is a particular case in point. The neighbourhood is home to a large number of social housing blocks (1960s) with residents from mostly migrant backgrounds. Within a global context of new redefined rent-seeking mechanisms, this article analysed impoverishment in Son Gotleu, based on three variables associated with housing: evictions, foreclosures and the property market. Our study shows that evictions were a determining feature of impoverishment, linked to the emergence of new speculative investment interests. Indeed, investment funds are very probably the most influential urban agents today.