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Ensure bank financing approval for feasible projects and reduce the average return on invested capital by 24 months.
Real estate market studies are fundamental when making strategic decisions and assessing investment risk in real estate developments. These analyses provide key information about current market conditions, future trends, and the characteristics of supply and demand to maximize the potential return on investments in real estate projects.
Having an in-depth understanding of the real estate market allows various stakeholders, from investors and developers to real estate agents and property owners, to make informed decisions and minimize risks. A well-executed market study not only identifies market opportunities and threats but also understands buyer needs and preferences. Additionally, it determines the market’s capacity to absorb new square meters and establish the best price per square meter. Likewise, it analyzes the strengths and weaknesses of the property to be developed, providing a verdict for the success of the new real estate project.
A real estate market analysis can be conducted for virtually any type of investment since it provides important information for strategic decision-making. Some properties that require a real estate feasibility analysis include:
Before investing in real estate development projects, it’s necessary to understand the demand, area needs, buyer or commercial tenant profiles, area characteristics, growth potential, among other factors that influence the selling price.
Market analysts are key for investing in commercial properties as they help assess the location’s viability, area growth potential, market value, consumer needs and preferences, as well as regulations related to the commercial use of the property.
Market analyses are essential for industrial investment projects, as they allow for a deep dive into the market where you want to venture, analyze competition, identify consumer needs and preferences, evaluate project viability, environmental impact, infrastructure, and services available in the area, accessibility to roads, airports, and other logistical routes. These analyses also allow understanding proximity to suppliers, customers, and skilled labor.
Additionally, analysis can cover specific areas such as pharmaceuticals, food and beverages, construction, agribusiness, among others, to have specific information about the area’s potential and profitability.
Investments in properties intended for rentals and vacation rentals require market analysis to obtain information about rental demand in the area, rental rates, competition with other properties, tenant preferences, potential tenant characteristics, public utilities, and recreational water amenities, among other factors.
Market analysis provide a deep understanding of current real estate market conditions, including prices, supply, demand, and trends.
Environmental and Legal Study
Environmental regulations and laws aim to protect the environment, prevent the development of real estate projects that affect diversity or natural resources. Environmental studies are conducted to learn about the treaties, conventions, laws, or statutes in force on the property and allow for anticipation of the procedures to be carried out, as well as actions to reduce pollution, preserve ecosystems, and generate a positive impact.
Data Collection Process
Data collection is a process of great importance for conducting a market study as it involves gathering information to determine the feasibility and safety of investment in a real estate project.
Presentation of Results Report
Once the data has been collected, a report with the results is presented for investors to analyze and determine the best strategies to ensure that their investment will be safe and profitable.
To conduct a real estate market analysis and support the collected information, tools are used that provide specific information from official institutions such as:
National Institute of Statistics and Geography (INEGI)
With INEGI documentation, demographic, socioeconomic, and social data of the Mexican Republic can be obtained at the national, state, or local level to better understand the market.
National System of Housing Information and Indicators (SNIIV)
The SNIIV allows obtaining information about the real estate market in Mexico, such as programs, construction statistics, and housing subsidies.
Websites and Real Estate Portals in Mexico
Websites such as Lamudi, Inmuebles24, Metros cúbicos, Century 21 Mexico are some portals that offer property listings that allow analyzing real estate market trends, price rates, and consumer preferences.
Real Estate Chambers and Associations
The Mexican Association of Real Estate Professionals (AMPI), the Association of Real Estate Developers (ADI), the Council of Real Estate Professionals of Mexico (COPIM) are some of the associations that provide analyses and reports of events related to the sector.
Bank of Mexico (Banxico)
Banxico offers information on interest rates, financial policies, economy, and other data to understand the socioeconomic environment.
Real Estate Consulting Studies
Consulting companies’ reports offer detailed analysis of the real estate market for making comparisons, predictive analysis, and forecasts.
Public Property Registry
This institution allows obtaining information about real estate, such as property titles and encumbrances.
Local and Municipal Government
Official government portals provide information on local regulations, construction permits, construction projects, among others.
Financial analyses are essential for the development of any real estate project, as thanks to this type of analysis, profitability can be determined by measuring and studying income, costs, cash flows discount, as well as profitability behavior under different scenarios.
A real estate feasibility analysis is a comprehensive and systematic evaluation conducted to determine the feasibility of a real estate project before its development. This type of analysis addresses various aspects, including financial, technical, legal, market, environmental, and social aspects related to real estate investment. The main objective is to analyze if the project is feasible and if it will provide satisfactory returns.
1.- Financial Analysis: Costs associated with land acquisition, development, construction, and project operation are examined. Additionally, expected revenues are projected, and profitability and financial returns are calculated. T
2.- Technical Analysis: Technical aspects such as land topography, accessibility, existing infrastructure, and technical challenges associated with construction and development are evaluated. L
3.- Legal Analysis: Legal and regulatory issues that may affect the project are reviewed, ensuring compliance with local regulations, obtaining permits, and solving potential legal issues.
4.- Market Analysis: Demand and supply in the market are investigated to determine the project’s feasibility. This includes evaluating competition, location, and market trends.
5.- Environmental Analysis: The project’s environmental impacts are examined, ensuring compliance with environmental regulations. The project’s sustainability is also evaluated.
6.- Risk Analysis: Possible risks associated with the project are identified and analyzed, whether financial, technical, legal, or otherwise.
7.- Social Impact Analysis: The project’s impact on the community and society as a whole is evaluated, considering social and cultural aspects.
Real estate feasibility studies are essential for analyzing all factors that influence the project’s viability and, in turn, its long-term profitability. The importance of these studies lies in factors such as:
Attracting investors with solid analyses that support the project’s viability
To conduct a comprehensive real estate market study, the following documents may be required:
Property tax bill
Property deed and condominium regime
Certificate or land use permit
Soil mechanics analysis
Property location plans
Subdivision plans T
Topographic plans with contour lines
Previously conducted environmental impact analysis
Architectural plans of housing prototypes
Urbanization and building specifications of prototypes
As its name suggests, a feasibility analysis aims to understand the feasibility and potential success of an investment. But those are not the only purposes; other purposes include:
Understanding potential customers’ opinions about the new project
A real estate market study is a detailed analysis that evaluates the conditions, trends, and economic variables that affect the purchase, sale, or development of properties. It includes a review of supply and demand in a specific location, comparative prices, local market characteristics, and future projections. This study provides crucial information for making informed decisions in the real estate sector, from setting appropriate prices to identifying opportunities
A real estate market study is essential because it provides an in-depth understanding of market dynamics, allowing for informed and strategic decisions. It evaluates supply and demand, comparative prices and local trends, fundamental to establish competitive prices and maximize return on investment. In addition, it identifies opportunities and risks, facilitates the development of effective marketing strategies, and helps adapt to changes in consumer preferences. Ultimately, a real estate market study serves as a guide for investors, developers, and industry professionals, optimizing decision-making and mitigating risks in the real estate market.
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