Property development : feasibility and impact parameters in the Vaal Triangle

Abstract

One of the important operational and in some cases, also strategic business decisions, is in respect of the investment of funds. Although there are a number of assets to invest in, two particular popular investment asset classes are land and/or property. Land however, is becoming a very scarce resource. It can be argued that many companies investing in the property sectors' main income is generated from the sale of land. A new way of gaining a sustainable income stream is followed. This is done by investing in different kinds of property development projects. One of the problems that companies face is to determine whether a property development project is a good investment, meaning that it will generate sustainable and acceptable profits in the long term. Companies evaluate prospective investment opportunities by assessing whether the expected return, adjusted for project risk, exceeds the company's required return. Different impact parameters exist and were identified in the study. Valuation methods used in determining the overall feasibility were discussed and evaluated to see the impact on the property development project.