Seven Billion Dollar Infrastructure Opportunity

A global real-estate developer and a major city in china partnered to create a unprecedented scale, a city center that would succeed both commercially and as a vibrant living community.

Challenge

The initial forecasts estimated the total cost of the project at over seven billion dollars—with over two million square meters of development area for retail and residential space in the heart of the new city center. It was by no means guaranteed that the project would attract the right mix of business and residential users to fill all this space—and near-vacant developments elsewhere in Europe and across the world were a potent reminder of the risks involved. So the developer and the city leadership asked Burk to help define a compelling value proposition for the new city center, one that would draw in global and national corporations, small and medium-size businesses, and apparitional residents.

Discovery

We realized that the new city center's success would rest on using leading practices in every aspect of the project—from marketing to construction, to designing effective project governance. The cornerstones of the entire development would be clear understanding of which economic sectors and demographics it needed to attract and a coordinated strategy to meet every need of those businesses and residents. We, therefore, began by working closely with the client to define the development's key global target markets and the value proposition for each of them.

With this picture in mind, we worked with the client leadership over an intense three-month period—including visits to benchmark projects in global megacities—to define the initial concept design. This determined the overall development mix between office, residential, and retail developments and identified the features that would differentiate each element, such as conference centers, fitness clubs, and swimming pools integrated into the office towers.

Impact

Working alongside the client, we helped establish and refine the scope of the project to ensure it could be successfully financed and delivered. The development won widespread support from government and other stakeholders, including critical regulatory concessions from the city government. As a further key area of impact, we helped secure the commitment of investors and strategic development partners for the entire project and defined detailed memoranda of understanding to set out their deliverables. Through the use of leading practices, such as optimizing the mix of project components, phasing the project based on the forecasted evolution of the city, and designing an effective fund structure, we helped optimize the financial case for the development, resulting in an increase in the project’s internal rate of return.