Importance of a Feasibility Study in Commercial Real Estate
Investing in the Thailand commercial real estate market can be risky. With several investment opportunities these days across traditional investments like stocks and bonds, and newer investments like cryptocurrency, real estate clients face the dilemma of where to invest their resources. The decision to undertake a new project or renovate an existing project depends on the projected returns. Thus investors must weigh the pros and cons of a project carefully, identifying hurdles as well as opportunities. In steps the feasibility report. A proper feasibility study will reveal to the investor the challenges and likelihood of success of a given real estate investment strategy.
What Does a Real Estate Feasibility Study Entail?
A real estate feasibility study is more than having the reasonable thoughts all jumbled in the head, as the thoughts are imprinted on paper with a pen to identify all the requirements and relevant factors that must be satisfied for a thriving development project.
High considerations are placed on economic, legal, technical, and scheduling factors. It also includes thorough market analysis, financial analysis, taking structural concerns without levity such as the engineering and architectural facets. With due understanding of a potential project, the real estate feasibility study ensures that as an investor or developer, the viability of the project is known no matter how large or small it is, and there is a higher chance of a beneficial result before commencing the commercial real estate development project.
When making projections for financial feasibility, considerations are always placed on the real estate market analysis as it is very important for the entire feasibility analysis. The market analysis is done to identify the requirements for the development of a property. A real estate feasibility study includes certain features such as zoning laws, land surveys, building permits, the impact on surrounding, housing developments like hotels, offices, and bigger projects.
The feasibility study provides information, economic projections and financial analysis that allows you to estimate the risks, incurred financial costs, human capital requirements, and the benefits of forging ahead with the investment.
While it may also be true that having a thorough real estate feasibility study requires more cost and time, wrong choices can lead to huge financial losses and severe possible consequences which were avoidable.
Benefits of a Real Estate Feasibility Study
As a potential property owner and investor, to avoid making a wrong choice from the pool of ideas, are you still wondering why you should have a feasibility study before investing in that property?
Validates the viability of the project
Not all projects are worth the attention given to them. Some are worth much more than others. A feasibility study will help you see clearly to determine whether a project is worth undertaking at all.
Increases your chances of succeeding
Assumptions, guesses and “gut-feelings” do not always go down well in the real estate world. The insights gained from a feasibility study can lead to bigger opportunities, as decisions are made based on the most important factors. In a short period of time, you can identify new threats, then possibilities and strategies that should be implemented for better results.
Improved investment returns
There are always better opportunities with a larger ROI (return on investment). To a large and reasonable extent, the goal of investing in commercial real estate is to maximize profit. A real estate feasibility study provides an insight into the costs you will incur, and allows you proper financial planning. Why start a project only to leave it abandoned or start thinking of ways to break the bank midway?
Hotel Feasibility Study in Thailand Commercial Real Estate
If you intend to invest in the hotel industry in Thailand, it is imperative you carry out a hotel feasibility study to investigate the viability and size of the opportunity from a profitability perspective. Understanding the local regulations, the local market, tourism trends, competitors, construction prices, possible expenses and revenue, will allow for proper planning to maximize ROI.
In case you are thinking of purchasing a land and developing it or you have a property that you want to develop to increase the purchase value, having a feasibility study will provide you all you need to make informed decisions. The overall goal of having a feasibility study is to identify problems, find a way to solve them and move on to address how it should be done to reduce risk and increase profit.
As a team, we effectively understand what a project means to you, whether as the owner or an investor. To allow you to make informed and successful investment decisions to reduce your hotel or commercial real estate projects’ risk, we provide research and data-based insights. Get started on your real estate feasibility study today by talking to us.