Stage 3: Project Feasibility (I) Reading: RE Development, Principles and Process. (Chapter 16)

Outline What is it? Carrying out the study Market Research & Analysis PESTEL factors feasibility Level 2 feasibility Risk management Who uses information from the feasibility study 2Stage 3: Project Feasibility

What is it? Formally demonstrating project viability to other partners More detailed studies along PESTEL factors with focus on a detailed market research Capital intensive.... Venture capitalists??? “A RE Development is feasible when the RE analyst diathermies that there is reasonable likelihood of satisfying explicit objectives when a selected course of action is tested for fit to a context of specific constraints and limited resources” Graaskamp (1972) 3Stage 3: Project Feasibility

What is it? Basic principles: – An organizational tool – details about development in a consistent format – Refined and modified throughout the 8 stages engaging tools like sensitivity analysis – A detailed integrated plan of the entire project to help achieve goals – Should not be viewed only as Benefit > Cost but aim at optimization 4Stage 3: Project Feasibility

Carrying out the study Could be a whole project with varying levels of complexity depending on: – Size of development – Type of product – Familiarity with locality – Familiarity with development team and partners – Etc.. Can be carried out by in-house team or outsourced 5Stage 3: Project Feasibility

Carrying out the study Report Outline Executive Summary Market Study Preliminary drawings Cost estimates Terms and sources of financing Government Consideration Estimate of value Conclusions Essentials for the study Maps Photographs of the site Renderings Market study Valuation models derived from market study Cost projections Development schedule Background of key players Stage 3: Project Feasibility6

Market Research & Analysis Market Research The process of gathering, analyzing and interpreting information about a market, about a product or service to be offered for sale to that market, consumer characteristics and patterns etc.... Market analysis for a product It is the identification and study of demand and supply for a particular product as they relate to the decision-making process. Interest in: – Market Potential – Marketability or Competitiveness of proposed project 7Stage 3: Project Feasibility

Market Research & Analysis Catchment area (area from which market will be drawn) – be certain Target market – determine absorption schedule from big picture Detailed analysis of demand and supply National economic conditions and trends 8Stage 3: Project Feasibility World >> Nation >> Region >> City >> Neighbourhood

Market Research & Analysis Demand analysis: – Number of people – Their expectations and requirements – Their demographics and characteristics – Etc..... Supply analysis: – Competitor analysis: major features, functions, advantages, challenges etc... – Comparable analysis: major features, functions, advantages, challenges etc... – Vacancies --- characteristics, rates etc all of these tied to a specific project 9Stage 3: Project Feasibility