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Feasibility Study

What is a Real Estate Feasibility Study?

A real estate feasibility study is a comprehensive analysis of the viability of a real estate development project. The study is typically conducted prior to the acquisition of the property or the commencement of the project, and its purpose is to determine whether the project is economically, technically, and legally feasible.

A typical property feasibility study will consider a range of factors, including:

Market analysis: This involves researching and analyzing the local real estate market to determine the demand for the type of property being developed, as well as the potential sales or rental prices.

Financial analysis: This involves estimating the project’s costs and revenues, including land acquisition costs, construction costs, financing costs, and ongoing operating costs. The financial analysis will also consider the potential returns on investment, such as net operating income and internal rate of return.

Technical analysis: This involves assessing the technical aspects of the project, such as the site’s suitability for development, environmental considerations, and the feasibility of the proposed design and construction methods.

Legal analysis: This involves reviewing the legal and regulatory requirements for the project, such as zoning and land-use regulations, building codes, and environmental regulations.

Why do you need a property Feasibility Study?

A feasibility study is an essential tool for ensuring the success of a project by providing critical information for decision-making, setting realistic goals, and identifying potential challenges and obstacles. Here are several reasons:

Assess viability: A feasibility study helps to determine whether a project is economically, technically, and legally feasible. This assessment helps to minimize the risks and uncertainties associated with the project by identifying potential challenges and providing recommendations for addressing them.

Identify potential problems: A feasibility study helps to identify potential problems or obstacles that may arise during the project, such as zoning restrictions, environmental concerns, or budget constraints. This information is essential in creating a realistic project plan and budget.

Set realistic goals: A feasibility study helps to set realistic goals for the project, such as the expected returns on investment, the project timeline, and the scope of work. This information helps to ensure that the project is achievable within the given resources and timeframe.

Secure financing: A feasibility study is often required by lenders and investors before providing financing for the project. The study provides a detailed analysis of the project’s potential returns and risks, which helps to mitigate the lender’s or investor’s risks and increase the likelihood of obtaining financing.

Guide decision-making: A feasibility study provides essential information for decision-making, such as whether to proceed with the project or not, what modifications need to be made to the project plan, and what resources are required to achieve the project goals.

Asset Economics can help your property Feasibility Study

Asset Economics utilizes advanced feasibility modelling tools to support our quantity surveyors in evaluating financial viability. Our modelling tools incorporate market research, a database of market-tested assumptions, and performance benchmarks.

Our development feasibility model is a powerful and flexible tool, designed for ease of use, and enables a comprehensive analysis of feasibility and real estate valuation. By inputting user data, the model calculates key investment performance indicators such as residual land value, profit, margin, net present value, and internal rate of return.

In addition, our sensitivity and probability analysis tool allows for simple yet detailed risk assessments, ensuring that the best financial outcome for the development site is achieved. The tool also allows for multiple options to be compared, aiding in the decision-making process.

Ready to make sure your project idea is feasible? Get in contact.

Property and Construction Services

”Asset Economics was very professional, on-time, and provided excellent service. The level of service throughout the entire process was timely and thorough, ensuring a smooth transition in our construction timeline and helped in minimalizing disputes. Even though the project was large, Asset Economics kept Sunland informed with constant updates and real-time information to ensure all deliverables and services were being provided and executed to the highest standard. Asset Economics provided stress-free and professional services that we would use again.

Andrew ConochieDevelopment Manager, Sunland Group