TIMING OF LAUNCHES: AN EXPERIMENTAL APPROACH

Abstract

Though optimal timing decisions have long been recognized as an inherent ingredient in the property development process, particularly in property launches, previous research on timing issues have been silent on treatments in the form of competition, volatility of prices, number of projects on hand as well as the state of the market conditions affecting developers timing and pricing behaviour. This paper aims to bridge the gap in knowledge as well as show the implications for developers by varying their timing and pricing strategies under an inter-temporal experimental setting, with an eye on their profitability levels. Interestingly, the experimental results show that the impact of the factors being investigated, not only reap unexpected effects, but also attempt to find the reasons behind this deviation from the hypotheses. The key findings of this study concur with the hypotheses that under competition, developers pricing and timing strategies may be sub-optimal in the sense that they may fail to reach their expected profit margin and also forego possible gains in profits. The experimental results also affirm that developers in a more volatile market do take advantage of larger price swings to deploy optimal timing strategies to complement their pricing strategies swing realizing a higher than expected profits. Conversely, the effect of the number of projects within the developers’ portfolio on optimal timing strategies appears to elicit significantly divided responses such that they do not adopt a single dominant optimal timing strategy to maintain profitability but employ a series of alternative timing strategies. Likewise, impact of market uptrend and downtrend on optimal timing strategies do not indicate a clear direction. Instead, the end results signify that developers timing behaviour deviate from a single dominant strategy to maximize profits, relying instead on other more critical factors such as generating constant cash flow and in accordance to corporate goals.