Real Estate Project Modeling and Decision Methods

A spreadsheet model is an effective instrument for quantitative estimates based on a specific framework. The excel sheet embedded in this article is an illustrative version for capturing similar data for any property identified with the required criteria in the prime location of Central London. While it a conscious decision not to engage in advanced computerization as it is not a pre-requisite, but ideally one of the outcomes of good asset management. The spreadsheet model suggested here is a methodological tool for understanding and improving the assessor’s ability to consider all factors in Real Estate Project Modeling and deriving decisions accordingly which will also facilitate the process of financial planning and expectations. The logic of the framework and the attached spreadsheet model is fairly simple and follows the approach tested and used by Project owners. At the very outset, we should make quantified entry assumptions about parameters that define the total cost of office property in Central Location. The model calculates the estimated cost and the anticipated returns.
The key assumptions cover the following:
Various costs per unit (such as land acquisition price per square feet, construction cost per square feet, costs of various furniture pieces, etc.)
Space needed for Office
Equipment and furniture required
Costs of each component (Furniture,
Total capital cost (land, building, equipment/furniture)
For all the apparent simplicity of this framework, it still establishes a clear hierarchy of parameters: thus, the area of the location (i) Prevailing rate per square feet area and (ii) space utilization
The whole exercise is primarily to assess investment and every smart investment provides long-term capital appreciation and immediate, consistent rental yields however while modeling the project we need to have all the facts at our disposal.
The prevailing rates of the property based on the location chosen
Establishment costs will always be significant, with stamp duty, legal and surveying fees and related costs on a case to case basis.
Furnishing costs, initial equity contribution is often higher than anticipated.
Capital investment must be balanced with projected income which means understanding what rent you will get and your running costs.
Reports reflect that the London office market experienced a pronounced office cycle across the late 1980s and early 1990s, as did many other major financial centers in Europe and Australasia Rapidly increasing rents.&nbsp.