...FOR EVALUATING AND SAFEGUARDING INVESTMENT DECISION


Market and location analyses to supplement fair market value or hypothecary value reports

It is not just since the "credit crunch" of 2008 that mortgage banks, insurance companies, investment companies and investment funds have been requesting that, when financing or purchasing large retail properties, the usual report on fair market value or loan value should be supplemented by the submission of a professional market and location analysis. The aim is to thereby particularly recognise and assess risks (as well as development potentials) that arise from the specific location factors, the purchasing power and competitive situation in the catchment area and their foreseeable development. These cannot be adequately ascertained through an analysis of land and property values or rental agreements and their terms, as various "cash-strapped" or failed project developments in the retail trade emphatically prove. Finally, the main task of any such market and location analysis of a specialist retail centre, shopping centre, outlet centre or other large-scale retail trade property can be reduced to the question as to whether the projected rents are actually achievable in the long term. Such an expert report is used both for planning projects and for refinancing inventory properties.

A market and location analysis in the form of a study to supplement a fair market value or loan value report includes (among others) the following work steps:

  • Presentation of the project or property data
  • Description of the location under study and the relevant environment
  • SWOT Analysis with a detailed analysis of the location features in relation to the utilisation concerned
  • Description and assessment of the competitive situation in the catchment area, with a graphic presentation of the relevant data for each competitive location and an appraisal of its competitive strength based on up-to-date on-site research
  • Delineation and zoning of the potential catchment area, as well as the calculation of the relevant key socio-economic data (population, purchasing power level, purchasing power potential, etc.)
  • Calculation of forecasts for (among other factors) the development of population and purchasing power in the catchment area
  • Analysis of the potential (sector-related) turnover which may be expected at the planned centre. In the case of inventory properties, an analysis of market shares and possible development potentials is carried out at this point.
  • Analysis and evaluation of the achievable rent for commercial space in the long term (where appropriate, also based on available pre-rental agreements)
  • Concluding summary with positive or negative financing or purchase recommendation

The concrete programme of work and services can be adapted according to the particular set task and/or specifics of the project or property to be examined.

 

Feasibility studies for office projects

The office markets are currently characterised by a situation with a predominantly luke-warm demand for area, with many vacant premises. Future-oriented investment in office projects therefore calls for a detailed analysis of the opportunities and risks, not only in the case of smaller, regionally-significant office locations, but particularly in the case of the so-called "Big 5" (Berlin, Frankfurt on Main, Munich, Düsseldorf and Hamburg).

An ecostra feasibility study offers a comprehensive, detailed decision-making basis for such an investment, dealing with points including the following

  • Presentation of the project data
  • Location description (description of the planned location and the situation in the relevant surrounding area), based on up-to-date, on-the-spot surveys
  • SWOT analysis with detailed analysis of the location features for the planned utilisation
  • Description and evaluation of the situation on the local and regional office area market (including development of the range of office area on offer, rental prices, vacant premises, net initial returns, presentation of the relevant competing locations and projects planned by competitors)
  • Analysis of the local and regional demand structures relevant for the office market and their development
  • Analysis and determination of potential users and of area demand in relation to the planned building
  • Appraisal and evaluation of marketable rent levels (including, if need be, the necessary incentives) for the planned building
  • Profitability or cost-effectiveness analysis (if desired by client)
  • Summary of the feasibility study

The specific work programme of a feasibility study can be adapted according to the task assignment and/or specific requirements of the office project under study.

 

Feasibility studies for leisure property

The high dynamics of the leisure market, involving short investment cycles with a constant demand for innovations and fresh concepts, place tough demands on long-term investments in leisure properties. A thoroughly-researched, expertly worked-out feasibility study ensures the necessary decision-making security in what is - particularly from an investor's point of view - an interesting but tough market.


ecostra feasibility studies for leisure property deal with points including the following:

  • Presentation of the project data
  • Description of the general market situation and the developments in the project-relevant segment of leisure property (e.g. fitness centers, recreation and fun pools, multiplex cinemas, wellness centers, leisure parks, indoor skiing halls, UECs, etc.)
  • Location description (description of the planned location and the situation in the relevant surrounding area), based on up-to-date, on-the-spot surveys
  • SWOT analysis with detailed analysis of the location features for the planned utilisation
  • Description and evaluation of the competitive situation within the catchment area, presenting the relevant data of each competing location and an appraisal of its competitive strength, based on up-to-date, on-the-spot surveys
  • Delineation and zoning of the potential catchment area, and determination of the relevant socio-economic data (population, purchasing power level, purchasing power potential, etc.)
  • Analysis of the relevant local and regional demand structures and their development
  • Analysis and determination of the potential demand in relation to the planned center
  • Appraisal and evaluation of marketable rent levels for the planned center
  • Profitability or cost-effectiveness analysis (if desired by client)
  • Summary of the feasibility study

The specific work programme of a feasibility study can be adapted according to the task assignment and/or specific requirements of the leisure project under study.

 

Studies of the housing markets

Besides the labour market and income situation, as well as the development of households, demographic changes (i.e. rises or falls in population, migratory movements, ageing, etc.) represent the most important driving forces for change in housing market demand.

For this reason, long-term investments in housing portfolios require a detailed knowledge of the relevant socio-economic developments in the area. Here, based on an extensive and detailed pool of data, ecostra offers evaluations and studies which take into account factors including the situation and development of the following factors:

  • Number of inhabitants and households
  • Composition of the age groups
  • Occupations
  • Income and purchasing power
  • Housing facilities (broken down by size, type of building, etc.)
  • Building permits and home-building activities
  • Number of vacant homes
  • etc.

In this context, please also take note that one of the services we offer is the drawing up of expert’s reports on rent value (living space), on traffic intensity and market value in accordance with Section 194 of the German Building Code (BauGB), on loan value in accordance with the German Mortgage Ordinance (Beleihungswert-Verordnung) as well as official banking regulations, etc. in the "Portfolio Guidance and Evaluation” section.

 


As well as office, leisure and home properties, ecostra also offers comparable feasibility studies and location analyses for:

  • Retail trade projects (see the "Optimising the Location Network" and "Center Development" sections)
  • Hotels
  • Logistic Centers
  • Mixed-Use Concepts

Do you have a project? Please address your enquiry to us without any commitment. We'll be happy to work out a detailed, tailor-made offer for you!


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