Entering a new market – A model for evaluating a new commercial real estate market

The development for Skanska Commercial Development (SCD) during the last years has been positive on all markets and Skanska therefore plans on expanding their activity. Central and Eastern Europe has had a considerable economic development, what is assessed to continue during the next following years. Bucharest is one possible alternative in the CEE for a new establishment by SCD. However, the investigation before an entry is a process with many factors that need to be taken into consideration. There are today no models on how and what a developer as SCD should evaluate in terms of opportunities and risks on a possible new market. The main purpose of this thesis is to develop a model for evaluating risks and opportunities of entering a new commercial real estate market. The study aims as well to evaluate the commercial real estate market in Bucharest. A qualitative methodology has mainly been used in this study, further a framework from Handfield and Melynk (1998) concerning theory generation from empirical findings, has been applied. Moreover, the study has in great extent been done in an iterative process. The study has concluded an evaluation model for commercial real estate markets, which contributes with a structured way of evaluating new markets. Further the Bucharest commercial real estate market has been evaluated on the basis of the developed model. The main risks found on the Bucharest commercial real estate market are restitution claims, the macroeconomic situation, the market’s situation in the real estate cycle, the potential corruption in the planning process of commercial real estate, the supply of land and land prices, and an overstrained construction market. The potential of the market is considered to be significant due to future economic growth potential of Romania and Bucharest and also because of the low supply of modern office space on the Bucharest market