What is property development feasibility?
Property development feasibility, often shortened to PDF, refers to a comprehensive assessment that architects and other stakeholders invest in to determine whether a proposed development project is viable and profitable.
This evaluation takes a lot into account – factors like budget constraints, time, regulations, and market trends. In-depth insight is key to visualising the project’s success and minimising risks.
Property development feasibility is absolutely necessary for successful architectural projects, significantly larger commercial ones.
Understanding and being able to produce a property development feasibility report is, therefore, a fantastic way to upscale your services.
Key components of a feasibility study
A feasibility study goes over several vital components, which provide you and other stakeholders with a holistic evaluation of the project’s success likelihood.
These components include:
An in-depth examination of the proposed site, its geography, opportunities, and challenges.
Review of the proposed design concepts, site layout and building plans.
Comprehensive financial viability analysis through cost estimates, projected revenue, expected return on investment, and even financing options.
Will the project make financial sense? Is the potential revenue likely to exceed the projected costs?
Understanding market trends and the potential demand for the proposed project. At this stage, you must Identify top market trends, demographic data, and competitor presence.
How will the development fare in the current market? What are the trends and forecasts?
Regulatory and legal considerations
Research into the potential legislative constraints that could impact the project.
Familiarise yourself with all the rules and regulations of the locality and ensure the proposed project can comply with all legal requirements. Non-compliance can result in severe penalties and project delays.
Does the proposal abide by all necessary zoning laws, planning policies and regulations?
What are the potential risks, and how can they be mitigated? This part includes the findings from all other feasibility study areas and has responses to the whole list of challenges.
Opportunities that a feasibility study presents
The stage of property development feasibility analysis is a chance to uncover opportunities and re-conceptualize the project with a stronger focus on them, e.g.:
Properties in prime locations, close to amenities, transportation, and popular commutation routes, typically have a higher demand. Identifying such locations can help spot attractive opportunities.
Look for areas that are developing or growing rapidly. These regions often present significant potential for high return on investment.
Unique Property Features
Properties with unique features or properties that offer something different to the market can gain an edge over the competition, presenting an excellent opportunity for developers.
Property development feasibility tools
If you have a knack for financial modelling, formulas, and pivot tables, then Excel or Google Sheets might be your ideal tools. You can design your worksheets to calculate your Return on Investment (RoI), Gross Development Value (GDV), or Net Operating Income (NOI) with just a few keystrokes. Excel and Google Sheets aren’t fancy, but they help you get lots done.
Excel and Google Sheets offer a customisable and flexible approach to your feasibility study needs. You have the power to build your spreadsheet from scratch, detailing each component to suit your project’s unique specifications. You can craft specific financial models, conduct sensitivity analysis, and forecast future property values based on individual parameters.
The biggest charm of Excel and Google Sheets is their simplicity and ubiquity. As an architect, you already know how to use them. Little to no learning curve means you can dive straight into your feasibility study without spending time familiarising yourself with completely new software.
Rather than being a specific property development feasibility tool, PlanMan is a project management suite that eliminates chaos and busy work from architects’ lives.
With powerful modules like document management and client communication section and a state-of-the-art co-consultants module that lets you manage everyone involved in the project development, e.g. real estate consultants who provide market, PlanMan is a great mothership for all your operations throughout all project phases.
One of the standout digital platforms, Archistar allows property developers and architects to seamlessly fuse 3D design, zoning rules and feasibility into one comprehensive toolkit. It’s an all-in-one tool. You’re not just evaluating feasibility. Instead, you’re designing, understanding and assessing in one fell swoop.
Archistar allows you to customise your project according to zoning rules, giving you real-time access to your project’s potential outcomes.
Argus Estate Master
For global property developers, Argus Estate Master stands as a great property development feasibility tool. It provides robust reporting capabilities, letting you assess costs, profits and returns at a glance. Time is of the essence in property development, and Argus Developer helps you make informed decisions swiftly.
Complex calculations and assessments are broken down in a user-friendly manner and made easily understandable.
Employing their development feasibility module, development prospects can be thoroughly appraised and project feasibility tested. This comprehensive tool allows you to assess the residual value of land and calculate key performance indicators such as development margin, net present value, and internal rate of return. Furthermore, it allows for effective risk management via sensitivity and probability analysis.
Estate Master’s intelligent and intuitive feature set makes it an impressive ally for developers venturing into complex projects.
An invaluable platform for understanding property attributes, Landchecker offers powerful capabilities in zoning, planning, heritage and land use data.
The company’s Reports Lab further offers a detailed analysis of development opportunities and restrictions.
Another property development feasibility tool offering a remarkable suite of features for properties is LeadDeveloper.com. It has a confluence of empowering features tailor-made for the ease of property developers.
One of the main stand-out features is the cost estimation tool. This feature enables you to calculate potential project expenditures with precision. It offers high-level overviews and finely-grained breakdowns, enabling you to navigate your costs accurately.
The platform is also armed with a revenue forecasting model, allowing you to project the plausible sales and rental revenue associated with development. In addition, this model can foresee potential fluctuations in market trends and adjust your revenue forecast accordingly, helping you stay ahead of the curve.
LeadDeveloper also incorporates a financial modelling toolbox. This feature predicts cash flows and comprehensively evaluates possible profits and risk factors. Data integration from financial systems adds to the overall accuracy, presenting a detailed feasibility assessment of your real estate project.
No matter which tools you pick, ensure you have a solid project management foundation that PlanMan offers. Sign up for a free trial now and see all the options for improving your project for yourself!