Investment Advice

Market Feasibility Study

A market study is a tool used to assess strengths, gaps and opportunities for the development. It is an analysis undertaken to identify the real estate gaps in a given area based on specific market conditions. The study may also be used to investigate an investment’s ability to produce sufficient revenue to pay all expenses and to provide a reasonable return for the money invested.

Project feasibility study, on the other hand, is the process of determining the viability of a proposed development. The main focus of a development feasibility study is to determine whether the proposed property is economically viable. A feasibility study, therefore, seeks to assess whether a development is physically possible, legally permissible, market feasible and financially viable.

Our advisory team is endowed with technical expertise in market research and information, project development costs, local land-use regulations, financial analysis, investment modeling and investment decision analysis to carry out Real Estate Feasibility and Market Studies to assess the practicality of a proposed Real Estate Investment Project.

Our analysis takes into consideration the market, legal, economic, technological, financial and other viability factors that are important for the successful completion of a successful real estate development project and for realizing optimum returns on Real Estate Investment.

We carry out thorough market research that informs the needs, gaps, challenges, and opportunities available in the market. The market research gives the clearest picture of the revenues our clients can realistically expect from the proposed development project. We consider the following while carrying out our market research assignments; the geographic influence on the market, demographics, competing projects, supply of the property, demand and what the development’s share of the market will be and whether the market has room for the proposed project to thrive.

Our Feasibility Study will:

Enable our clients to establish whether their projects are financially feasible or not;

Here, we assess the viability of a proposed development project using a number of capital budgeting techniques such as:

  • The payback period method.

The payback period is the time it takes for a project’s net cash inflows to equal the initial cash investment. That is the amount of time required for an investor to recover their initial investment in a project, as calculated from cash inflows. In the case of an annuity, the payback period is found by dividing the initial investment by the annual cash inflow. For a mixed stream of cash inflows, the yearly cash inflows are accumulated until the initial investment is recovered. The decision criteria are as follows:

  • If the project’s payback period is less than the maximum acceptable payback period, accept the project; and
  • If the project’s payback period is greater than the maximum acceptable payback period, reject the project
  • The Accounting Rate of Return (ARR) Method

This method of feasibility study involves estimating the accounting rate of return that a project should yield. If it exceeds a target rate of return then the project is acceptable. The accounting rate of return is calculated by dividing the average annual accounting profit by the initial investment. Alternatively, the rate of return can be calculated by dividing the average accounting profit by the average investment.

  • The Net Present Value Method

The net present value (NPV) of a project is the difference between the project’s discounted cash inflows and discounted cash outflows. The decision criterion is to accept a project with a positive net present value (NPV).

  • The Internal Rate of Return (IRR) Method

The internal rate of return (IRR) is the discounted cash flow (DCF) rate of return (DCF yield) that a project is expected to achieve. It is the discount rate at which the net present value (NPV) equals zero (0). If the internal rate of return (IRR) exceeds a target rate of return, the project would be a worthy undertaking.

We therefore enable our clients to:-

  • establish whether the locale’s regulatory structure will allow the proposed Real Estate Investment Project;
  • identify feasible options;
  • Inform our clients on the issues that may have a significant effect on the proposed development or the investment project including:
    • The market demographics;
    • Suitability of the site;
    • Governmental legislation on the development, and;
    • Land-use policy by the local authority;
  • Outline potential risks and criteria for success;

Our experience in feasibility study has allowed us to have the unrivaled expertise required to carry out a Real Estate investment consultancy. We are also committed to continuous learning and our Feasibility Studies are carried out to the highest possible standards. Continuous mentoring and training of our staff has also ensured that we have a workforce that is committed to high standards of integrity.

  • The Net Present Value Method

The net present value (NPV) of a project is the difference between the project’s discounted cash inflows and discounted cash outflows. The decision criterion is to accept a project with a positive net present value (NPV).

  • The Internal Rate of Return (IRR) Method

The internal rate of return (IRR) is the discounted cash flow (DCF) rate of return (DCF yield) that a project is expected to achieve. It is the discount rate at which the net present value (NPV) equals zero (0). If the internal rate of return (IRR) exceeds a target rate of return, the project would be a worthy undertaking.

  • Enable our clients to establish whether the locale’s regulatory structure will allow the proposed Real Estate Investment Project;
  • Enable our clients to identify feasible options;
  • Inform our clients on the issues that may have a significant effect on the proposed development or the investment project including:
    • The market demographics;
    • Suitability of the site;
    • Governmental legislation on the development, and;
    • Land-use policy by the local authority;
  • Outline potential risks and criteria for success;

Our experience in feasibility study has allowed us to have the unrivaled expertise required to carry out a Real Estate investment consultancy. We are also committed to continuous learning and our Feasibility Studies are carried out to the highest possible standards. Continuous mentoring and training of our staff has also ensured that we have a workforce that is committed to high standards of integrity.

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