PRE-DEVELOPMENT ANALYSIS: CASE STUDY OF A COMMERCIAL MIXED-USE DEVELOPMENT

Abstract

Real estate development is all about the allocation o£ resources - to allocate limited resources in the best way possible so as to produce an investment which will provide the developer or investor with profitability and security. The allocation process is a dynamic one, moulded by the continually changing forces of the market and by the changing expectations of the future. These changes inject the risk element into any form of investment which must be identified and minimised. This is achieved through the extensive analysis of historic data upon which forecasting of the future is based. Although maximising profitability is a common goal for all developers and investors, each developer or investor will have his own measures and interpretation of this concept according to personal investment criteria and constraints. Feasibility studies undertaken during the pre-development stage will take account of the idiosyncratic considerations and determines how well the Investment accomodates them. Comprehensive market and financial analyses are perhaps the key components of any pre-development analysis as they are the bases on which all evaluation of the project is carried out. Real estate development is today a highly complex and multidisciplinary process which requires professional skills and co-ordination. With the vast sums of capital outlay required, decisions cannot afford to be intuitive. The pre-development analysis provides the more scientific approach to determining the investment feasibility and financial viability.