This entails the provision of professional, expert and factual advise on the suitability or viability of a development before committing resources, thus aiding the decision making process of a property developer or property investor.
At Fortress Property Consultants our feasibility studies assess the appropriateness of a development in relation to its proposed site/location and prevailing market conditions.
We carry out a sensitivity analysis- establishing the worst case, best case and several intermediate positions of a development project. In this way we ensure decision making is informed and guided by the various outcomes revealed by the sensitivity analysis.
First phase of our feasibility studies involves:
Assessing what the total estimated cost of a development is likely to be, including
◈ Cost of purchasing stand including transfer fees
◈ Total cost of demolishing existing structures
◈ Total estimated cost of construction
◈ Total cost of professional fees, municipal charges etc
◈ Estimated opportunity cost of capital invested or total estimated cost of borrowing money for the development
The second and last phase involves:
Estimating the net likely rental that would be received from the completed development, if development will be retained by developer, then assess return on investment to establish if it makes any economic sense. If the development is to be sold then an estimate of the open market value/ sale price of the completed development is assessed to establish its profit or loss position in comparison to the total development costs.