Feasibility Study

KID is advised to look at and understand the budget, cost plan and cash flow predictions before assessing the feasibility of this development.

Multiple assumptions have been made when assessing the feasibility of the proposed mixed-use development for KID.

All 1 & 2 bed apartments will be sold off-plan before construction has completed.
2-bed apartments were sold at a rate of 1 per month from March -October 2023.
1-bed apartments were sold at a rate of 2 per month from March-July 2023.
Commercial units were assumed to be leased post construction. Lease timeline to be decided by KID.
Development expenditure was benchmarked against similar project within the Yorkshire & Humber region.

The feasibility of this proposed development is dependent on KID’s aspirations for either building to sell, building to lease or a combination of the two. It is recommended that KID sell the 1 & 2 bed apartments and lease the commercial space. It would be advantageous to the client to retain part-ownership of the building as the Kelham Island area in Sheffield is considered to be a slow cooker.

However, the development option provided within this report is many of which could be undertaken. More time would be required to ascertain the best possible development choice for KID. The developers are competing in an increasingly futile market, for example BCIS predict a 17.6% increase in material costs for 2022, this further increases the overall cost of the project. Although, the rising residential and commercial property values may offset the increase in material costs.

KID should also note the accuracy of dimensions used for the approximate estimation of construction cost were overstated due to the gross internal floor area being unknown at this stage of the development. With further development of this proposal construction costs may fall due to the more accurate sq metre rate being applied to the rates within the elemental cost analysis.

Due to the uncertainty of the ground conditions the client should be aware that any return tender would include additional costs for the risks associated with the site. These issues have been made aware through the building surveyors’ analysis of the site. KID should therefore take into consideration the risk and cost associated within moving forward with this development.

It must be stated that the current development opportunity presented in this feasibility report would not be a prudent investment for KID. As it stands the short-term return on the developers return stands at 1.8%, therefore this is not feasible design solution for the plot in question. It is therefore recommended that KID sell their residential apartments off-plan and maintain ownership of their commercial plots to lease over the next 10-20 years to make a suitable profit on their initial outlay.