The question of commercial property or residential property is a common one for investors and developers alike. While residential property provides a diverse range of property types such as apartments and units, commercial property offers retail, industrial, office space, and other commercial categories. When looking at their financial benefits, developers often rely on real estate development software to forecast the returns of either type. In this article, we examine the advantages of both property categories for development.
While this is not always the case, commercial property development projects will often be larger in scale than residential projects. The scale may refer to the number of offices or residences being built, or it may refer to the cost of the project itself.
Most developers would probably rank choosing the development site to be one of the most crucial aspects of the property development process. Along with a valuation of the site itself, which can be accurately conducted with property valuation software, in-depth research and professional advice are excellent strategies for selecting a site that will not only attract buyers, but also reap generous profits.
1. Feasibility Studies
Using sophisticated real estate development software, developers are able to conduct a feasibility study to help them get an accurate value of the site they are considering purchasing. It will also allow them to project expenditure and revenue for better planning and forecast performance indicators such as profit, the internal rate of return and net present value.
A feasibility study is one of the most important preparation tools for the property developer. It allows the developer to analyse a potential project for profitability, to adjust costs and other inputs, and to obtain an accurate picture of the project under different market conditions. In this article, we look at the key steps involved in a development feasibility study.
What’s Development Feasibility?
Development feasibility provides the developer with a clear picture of all the costs, returns, and variables in the potential project. As such, it’s an essential research tool that can provide a picture of the profitability of a project before the developer actually accrues any costs. Sophisticated real estate development software that supports a large range of inputs can provide some of the most accurate feasibility studies.
Property development projects require significant preparation times that may last for months. Along with financing, sourcing a site, and getting together a team to undertake the project, development feasibility is one of the most important – if not the most important – components in the preparation phase. Using property valuation software can assist with ensuring that your feasibility study is accurate and thorough.
Why are Development Feasibilities Necessary?
Detailed feasibility studies function like business plans, allowing investors to map out the numbers and strategy for the development before making any outlays. A detailed development feasibility study helps identify any risk or problems in the project.