Most Australian Companies Neglecting Real Estate Strategy
Three out of four private companies in Australia are unlikely to consider selling non-core real estate assets in 2006, according to a survey of 200 enterprises in the country.
In this high-priced market, the sale of some real estate can be an excellent means of improving a corporation’s business performance, yet 75% of companies don’t see it as a priority.
“More often than not, real estate assets comprise a significant proportion of a company’s asset base, yet their function and alignment with the business strategy is invariably not considered or well understood,” said Ross Hamilton of Ernst &Young Real Estate Advisory Services.
“The retention of non-core or inefficiently utilized real estate assets should be considered as an impediment to business growth, impacting upon both cash flow and the level of available funds for reinvestment into the core function of the business,” he added.
Hamilton says that it is a good idea for companies to create a formal strategy for dealing with real estate, much the same as they do for things like human resources, marketing, and public relations. Knowing what to sell and when to sell it can put a business in far ahead of the competition in terms of its investments.