A good market analysis is essential to the success of your project. It provides detailed supply and demand data, which allows you to know:
· What are the best functions, specifications and size of units for the proposed development project?
· How many identical units are available on the market, at what price, and since when?
· Is the project up-to-date with the latest trends?
· How much income can this project expect to generate over a certain period of time?
· What are the regulations relevant to this development project?
· What is the local community’s opinion of such a project?
The market analysis can be used by Engineers, City planners & Architects, Developers, Private Banks, the Public Sector, NGO’s, and Academics
What Are The Different Types Of Market Studies?
1- Best Use Studies
Developers will often do a best use studies when discussing project ideas. This study will be based mostly on data driven decisions and the developer’s experience of local market conditions.
2- Market & Feasibility Studies:
Assessing the feasibility and potential of certain types of development projects can help developers make a more focused investment decision. The study is done by listing the inputs necessary for such a project, and comparing those to existing market conditions.
3- Appraisal
Appraisals are performed regularly by real estate professionals to assess the value of a site. They are typically based on market prices, the replacement costs of any adjustments, and present worth. More detailed appraisals estimate an absorption rate for the site, as well as defining potential market capture. Appraisals are used to set the value of a property as a collateral, or to define the price of the project once it has been completed.
4- Cost- benefit analysis
A cost-benefit analysis assesses the value of a project to the public. For example, will new adjacent road decrease traffic sufficiently to warrant the price? These analyses will focus on the amount of public investment and the production of public activities. Dollar values and social costs are quantified and included in the analysis. Estimates of the return on investment, the absorption, the market capture, and the timing are created. Private and public investors alike can benefit from such an analysis.
5- Analysis of economic base
An analysis of economic base creates projections for near-term growth for a geographic area, generally created for planning and economic development agencies. Developers use the figures generated to help assess potential demand for their projects, as well as getting a clearer picture of the potential opportunities and trends relevant.
6- Analysis of economic impact
The analysis economic impact answers the following question: how can a specific large scale project affect the local economy? This type of study focuses on economic contributions such as taxes, infrastructure, or new services that a project will have in a geographic area. As these studies have become more refined and have included previously externalized costs, the results show that some growth may cost more for community than the tax income it provides.
7- Land use study
Land use studies analyze the geographic pattern of development in an area. They serve as a reference for public policy decisions related to land needs and infrastructure requirements. Data might also serve as the basis for zoning and the granting of variances. The information gathered in these studies can also be valuable for developers, as it provides insights on existing market conditions.
8- Marketability study
Marketability studies describe the necessary prices, sizes, functions and features required to capture market share. It is mainly used to determine the success factors of a specific project.
9- Study of Highest and Best Use.
Studies of highest and best use outline the optimal usage of a site. They are typically used when someone has a site, but is not sure how to obtain the highest possible return on their investment. Performed by market analysts for investors, property owners and lenders, these studies concentrate on a specific parcel of land and its relation to the community. Estimates of return on investment, value, absorption and market capture are generated.
10- General Market Study.
General market studies are the most common type. It assesses the existing demand and supply for a certain type of use or property in the market. It can be used by any person in the development process. Typically, market studies will assess the potential return on the investment, absorption and market capture rates and the project's timing.
How is market analysis performed?
- Project development
During initial meetings and negotiations, the delimitations of the study are set and the consultant-client relationship is defined. This is done in order to make sure that the consultant and the client have a clear vision of the product.
- The Market Analysis
The goal of any market study is to find the point where supply and demand intersect. A market analyst accumulates information on as many factors as possible to make a refined guess of that intersection point based on four basic components:
· The project details,
· A demand survey,
· An assessment of supply,
· A synthesis.
- Project Details
In this section, the analyst lays the foundation for a defensible market study. The project description should perform four tasks:
1. Outlining the constraints of the study;
2. Listing the boundaries of the study;
3. Describing the project;
4. Evaluating indirect economic and site factors.
- Demand survey
The factors affecting the demand survey include:
· Population,
· Income,
· Employment,
· Market trends,
· Relative prices,
· Taxes,
· Interest rate,
· Down payment requirements,
· Future predictions.
Most analysts will concentrate on population, income and employment when performing a demand study. The number of people, their incomes and the type of jobs they hold will be the most decisive factors in measuring demand. By measuring trends for each component, we can gain a better image of the economic landscape of the project.
- Factors affecting supply
Supply includes the following factors:
· Prevailing supply;
· Intended supply;
· Competitive environment;
· Availability of land;
· The cost of land, labor and capital.
Hayek Group has been a reference in real estate research for the past 35 years. Our flagship product is real estate Market Study for developers, lenders, and government agencies. In the studies, we dig deep into the details of your project, with identification and analyses of the associated market data. The driving factors for the project’s success are analyzed, as is the buyer profile, amenities, locational positives and negatives.
Our market study products allow you to have the most accurate forecasts, even in the most uncertain times.
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