Importance of Feasibility Studies
A Feasibility Study report is a business plan for a specific real estate project. It provides the rationale and the support for that rationale to pursue a specific real estate project from the feasibility phase, pre-construction, construction and occupancy through investment management.
ProjectWell Management Pvt. Ltd. offers a comprehensive justification of the project relative to the target market’s needs and wants, and a thorough risk analysis with appropriate mitigations. A feasibility report is dynamic and incorporates any change to assumptions or new information. As a result, all assumptions made and external dependencies specified in the Feasibility Study are meticulously documented. The report is prepared in close consultation with our client (in addition to an architect and construction consultant and others) since some of the work included in the report most likely has already been completed by the client or his consultants, that is, the idea or vision for the project or the market study.
ProjectWell Management Pvt. Ltd. prepares feasibility studies to help real estate owners, investors and lenders make informed decisions by providing critical information about a specific concept or project, such as new construction, redevelopment or renovation of an existing property, or reuse of underutilized or abandoned facilities. Because a Feasibility Study provides specific and organized information about a real estate project, a comprehensive Feasibility Study is a crucial part of the development process. It outlines investors, end users, government, community – and the developer (our client) about a project’s operations and goals.
The importance of a comprehensive, thoughtful Feasibility Study cannot be overemphasized. Much of the project’s success hinges on it. Despite the critical importance of a business plan, many entrepreneurs and companies procrastinate when it comes to preparing a written business plan document. They argue that their marketplace changes too fast for a feasibility plan to be useful or that they just do not have enough time. However, just as a builder will not begin construction without a blueprint, eager real estate investors should not rush into new investments without a plan or a Feasibility Report.
Key sections included in a Feasibility Study include:
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Marketability Study – Could the project be built? Are necessary approvals in place, and if not, what needs to be done? Can the site support a building structure that is planned? Can any environment contamination be cleaned up? – Should the project be built? Who is the target market? What do they want? A marketability study tries to create a market area demand model based on available demographic information and the application of common sense to develop a picture of the current and future market area trends that may affect demand (and thereby affect market penetration and sales revenues) along with preparation of market area supply information to include the effects of historical, current and potential future market competition (direct and indirect) that may impact the project’s market penetration opportunity and prospective sales revenues.
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Who are the competitors? A competitive analysis gathers this information, and compares the competitor’s products to your project justifying appropriate pricing.
- Define a spatial monopoly, a sustainable market niche that should place the client’s project at a distinct advantage over competitors (assuming the client company’s plan is professionally executed and managed on an ongoing basis).
Risk Analysis and Mitigation – The risk analysis identifies areas of risk that that every real estate project, or corporation for that matter, has with regard to its existence.
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