Market Analysis and

Economic Feasibility

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Outline

Previous Lecture
Determining Feasibility
Market Analysis
Marketability Study
Cost Projection
Investment Analysis

Economic Feasibility Analysis

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Previous lecture
Feasibility and
site analysis

Construction

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Conceptual
Design

Plan
Submission

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Schematic
Design

Final

Determining Feasibility
The objective of the market study and the marketability
analysis is to
1.
2.
3.
4.

Define the specific product and features.

Set the price range.
Project the expected pace of sales or leasing.
Identify the most probable changes that will occur in the
economic and development climate between initiation of
the project and completion of the program of sales or
leasing.

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Determining Feasibility
the cost
structure, densities sought, timing of
delivery of product, and the target
purchasers or tenants.

Decisions based on this information will dictate

However, regardless of the quality and quantity of

statistical information available, the feasibility study also
requires a thorough understanding of
elements such as community acceptance and
local political environment. This information can
be obtained only from personal interaction with
regulatory staff in the applicable jurisdiction,
elected officials, and community leaders.

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Market Analysis
Market analysis is the identification and
study of the market for a particular
economic good and service
General economy to
specific property
two approaches
in market analysis
Specific property to
general economy
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General to Specific
Economic Overview

Capture analysis

(regional, local and

neighborhood analysis)

Inventory of
competitive supply

Test of subject property type

under alternative uses to
determine most productive use
(productivity analysis)

Estimate of
probable demand

Marketing strategy

Equilibrium/
Residual analysis

Probable Performance
of subject property

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(income forecast)
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Specific to General
Productivity analysis and
Alternative Use Scoping

Equilibrium/
Residual analysis

(preliminary screening of unfeasible

alternative use)

Capture analysis
Economic Overview
(regional, local and neighborhood)
Marketing strategy
Inventory of
competitive supply
Probable Performance
of subject property
Estimate of
probable demand
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(income forecast)

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Marketability Study
Marketability analysis deals with the

acceptability of a specific property

and product type to be absorbed
successfully in a given market
condition.
Recognizing that most projects, even small ones,
require years of preparation, development, and
construction prior to delivery of the product to the
purchaser or renter, the marketability

analysis will often be done several

times during the
life of the project 9
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 Cost projection
In order to determine the potential for
profitability, it is required that all of the

elements of development be
identified and cost estimates be
made, with increasing levels of specificity as
the project moves toward start of construction

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 Major Cost Categories

Rezoning, special use permits, special exceptions, and other
amendments to land use, including costs of engineering and
legal and community outreach to obtain approvals
Land cost (and its relationship to yield) and structure of
payment for land
Feasibility studies, market analysis
Contracting and purchase costs, including legal, title work
and title insurance, closing costs, appraisals, loan fees, and
lenders required studies
Engineering and design
Environmental studies
Boundary survey

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Topography
Flood plain studies
Soils tests and bearing capacity
Site plan, subdivision plan, plans and profiles
Easements
Land development costs
Clearing, demolition, rough grading, and earth balance
Soils / rocksoil import/export

Hazardous materials removal and restoration

Siltation control, maintenance during construction
Storm water management, best management practices
Wetlands protection and management

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Retaining walls
Streets and access, including temporary construction
access
Curb and gutter, sidewalks, driveways, medians
Trails and bike paths
Utilities: easements, infrastructure, permits and access
fees
Sanitary sewer
Water
Gas
Electric
Telephone, Internet, cable, specialized access

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Street and lot lighting

Landscaping, trees
Fences and decorative walls
Offsite costs (e.g., downstream mitigation, easement
acquisition)
Covenants, conditions and restrictions, formation of
owners associations, applications and qualifications for
regulatory approval (e.g., FHA approval of subdivision),
condominium or cooperative documents
Entry features and signs
Specialized impact studies (for example, noise
studies near airports) and mitigation costs
Letters of credit, bonds, and other forms of surety
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 Completion agreements and other development documents

Final subdivision approval, punch list and repairs
Insurance
Real estate taxes during holding period and special
assessments
Other transportation access and interface (e.g., bus or train
connections)
Contribution to public facilities, impact fees, and similar
proffer costs
Architecture and engineering fees
Testing and inspections (fees paid to local regulatory

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agencies and consultants for professional testing)

Hard costs of construction of buildings, garages,
and related structures
Amenity package and costs (parks, tot lots, pools,
tennis courts, club houses, etc.)
Merchandising, advertising and marketing costs

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Points for discussion

1. Mengapa analisa kelayakan dan
pasar perlu dilakukan?
2. Darimana data untuk kelayakan
pasar bisa didapatkan

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Summary
Determining Feasibility
Market Analysis
Marketability Study
Cost Projection
Investment Analysis

Economic Feasibility Analysis

Points for discussion
Summary

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