- Real Estate
- Financial Feasibility
Before investing time and money into a project there are several questions that land developers should be able to answer. To answer these questions and prevent risky investment and development decisions, a market analysis/feasibility study should be conducted. By taking an outside look at a planned project, the assumptions behind it, and potential challenges to its success, a market analysis/feasibility study helps result in educated decisions that minimize potential costly losses down the line. Read on for five key questions a market analysis/feasibility study can answer.
- Does the planned location make sense? Market analysis and feasibility studies can be used to eliminate some of the risk in developing a new project. By determining if there is sufficient demand in the market area to support the project and its intended use, the project will face a greater likelihood of success and profitability upon full build out.
- What do market conditions mean for future development? A good market analysis and feasibility study includes a discussion of trends in local and regional markets. Case studies and other related research can lead to an understanding of these trends, which is an important component of evaluating the overall potential for success of a project.
- Is this the highest and best use for land development? Concept testing of a planned project can help developers and investors understand the potential to increase their return on investment (ROI). While the initial planned concept might turn out to not be supported, the market analysis and feasibility study could point to alternative uses that would be more successful in an area. Ultimately, these studies could uncover opportunities with a higher ROI.
- What level of financing is needed? The financial component of a feasibility study provides an assessment of whether becoming operationally profitable is realistic and if any funding or financial assistance is needed to help get a project there. By pinpointing the level of assistance that may be needed to make a project feasible, developers will be armed with the information needed to seek loans, investors, and other funding.
- Will I be able to obtain funding and approvals for my project? A third-party perspective of a project is often required to receive loans or other funding, in addition to municipal approval. A market analysis/feasibility study helps by providing insights that investors are going to want to know before investing in a project.
All in all, planning is critical to the success of a development project. A market analysis and feasibility study can give guidance on maximizing the potential of a proposed site and project, helping to boost the potential ROI of your investment. Want to learn more? Check out Camoin’s Real Estate Development Services page for additional resources.
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