Knowingly taking risk

Investment decision making in real estate development

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Knowingly taking risk is essential to the success of the real estate development business. Investing in real estate development projects, which are characterised by complexity and uncertainty, implies that high risks are taken. Interestingly, little is known about how real estate development organisations have incorporated the skills and procedures necessary to deal successfully with the risky nature of the business. This thesis offers insight into the investment decision making process of three prominent Dutch real estate development companies. The result is an explanatory framework that demonstrates that making good investment decisions is not restricted to analysing risks to support the justification of decisions, but it is also necessary to address decision problems in time, and to ensure that someone is accountable for the decision. The framework offers an innovative perspective on risk management and decision making. Additionally, the thesis presents management practices used to ensure that risks are taken knowingly. These practices are of relevance to senior management of real estate development organisations to design and improve its own decision making procedures.