2351 assignment2
Problem
There appears to be a problem for Student Housing Australia to gain a quick return on investment for development from rental revenue. Reasons are explained in details as follow.
First of all, as mentioned by Ms. Anne Wong (Coulthard & Dooley, 2010), most universities are located in areas not considered prime land. In another words, universities tend to locate in suburbs where the land price is not that expensive. As a result, the potential rentals to students would be lower compared to other demographic groups. What is worse for Student Housing Australia is that international students tend to live together so as to share rentals and bills as well as build social connections. For instance, if there are 1000 international students, originally, they could rent 1000 units to live. However, due to the reason explained above, 2 or 3 international students would like to form a group to rent one apartment, the total number of apartment rent will be reduced below 500 units. In this case, the rentals will drop sharply, and the return for Student Housing Australia will decline dramatically in turn.
In addition, Owners Corporation of Student Housing Australia will only sell up to 50 percent of the apartment complexes within each building and leave the rest 50 percent for its own investment (Coulthard & Dooley, 2010). The half part they sold to potential investors is the most profitable one, as the rent received from international student will be relatively low and lasts a quiet long period.
Furthermore, in order to gain access to an entire block of units from the same development, ties or contracts must have been made with such developer. What is worse, according to Malaysia’s policy, foreign investments are limited up to 50 percent ownership of a block area. Some land are even reserved by Malaysian government (Coulthard & Dooley, 2010). Under these circumstances, if Student Housing Australia intends to purchase a land near one target university, however, they have
There appears to be a problem for Student Housing Australia to gain a quick return on investment for development from rental revenue. Reasons are explained in details as follow.
First of all, as mentioned by Ms. Anne Wong (Coulthard & Dooley, 2010), most universities are located in areas not considered prime land. In another words, universities tend to locate in suburbs where the land price is not that expensive. As a result, the potential rentals to students would be lower compared to other demographic groups. What is worse for Student Housing Australia is that international students tend to live together so as to share rentals and bills as well as build social connections. For instance, if there are 1000 international students, originally, they could rent 1000 units to live. However, due to the reason explained above, 2 or 3 international students would like to form a group to rent one apartment, the total number of apartment rent will be reduced below 500 units. In this case, the rentals will drop sharply, and the return for Student Housing Australia will decline dramatically in turn.
In addition, Owners Corporation of Student Housing Australia will only sell up to 50 percent of the apartment complexes within each building and leave the rest 50 percent for its own investment (Coulthard & Dooley, 2010). The half part they sold to potential investors is the most profitable one, as the rent received from international student will be relatively low and lasts a quiet long period.
Furthermore, in order to gain access to an entire block of units from the same development, ties or contracts must have been made with such developer. What is worse, according to Malaysia’s policy, foreign investments are limited up to 50 percent ownership of a block area. Some land are even reserved by Malaysian government (Coulthard & Dooley, 2010). Under these circumstances, if Student Housing Australia intends to purchase a land near one target university, however, they have
References: Amiri, A. S., Seidi, M. & Riasi, A. (2012). Identifying the barriers to Iran’s saffron export by using Porter’s Diamond Model. International Journal of Marketing Studies, 4(5), 129-138. Coulthard, M., & Dooley, L. (2010). Cases in international business: strategies for internationalisation (1st ed.). Prahran, Vic: Tilde University Press. Porter, M. E. (1979). How competitive forces shape strategy. Harvard Business Review, 57(2), 137-145. Porter, M. E. (1980). How competitive forces shape strategy. Mckinsey Quarterly, (2), 34-50. Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business Review, 86(1), 78-93.