Abstract:
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Based on a real property development case in Granollers, this project intends to clarify the
aspects and actions that affect the economical viability of a property project.
The aim is to establish some bases and criteria for decision-making, so as to avoid that a
project which is initially viable ends up with losses.
The project will analyse the economic aspects of the property process, from the purchase of
the land, to its town-planning parameters, the definition of the property, the building stage and
the parallel commercial stage.
The analysis of these stages will provide the reasoning behind the decisions taken and on the
other hand alternatives which could be an improvement.
The study of the development’s economic viability gives us the possibility of analysing the
results of the development based on several hypotheses. Therefore three situations will be
considered; firstly the initial viability implied in purchasing the land, secondly the impact of
the final real building cost on the viability, and finally the effect of the real sales and revenue
on the final result of the development.
The current economic recession gives us a different perspective to when this project was
started, but conclusions can be drawn which at least will allow us not to repeat past failures.
The beginning of the last decade, markedly expansive and with a very important economic
growth, led us to believe that the property development market was ruled differently than the
rest of consumer products. The belief that the prices would always go up and the great
demand, aided by easy credit conditions, facilitated the growth of a great quantity of property
developments which are now still waiting for a buyer.
The conclusions drawn reveal the relative impact on the final economic result of the increased
building costs opposed to the commercial side of the development, where the success or
failure of a property development lies as in the case of the development analysed.
This low repercussion of the building cost on the final result does not lesson its importance,
but reveals that in the great majority of technical projects and the professionals that intervene
have sufficient capability to reduce the possibilities of ruining a viable property development. |