An Evaluation of Real Estate Development Feasibility Software Options

Property development has long-been noted for being a risky process. As a result, participants in property development have often tried to apply mainstream financial modeling techniques to ‘accurately’ appraise their options, with a view that the KPIs that stem from these are the same. Ultimately this has led many practitioners to work on the assumptions that conventional spreadsheet models, such as those developed in Excel, are adequate. However, financial appraisals and development appraisals are somewhat different. For instance, the highly geared/sensitive nature of development means that only small market movements can turn a project not viable. During property booms, overlooked elements or erroneous spreadsheet models may have not seen a project fail as the shortfalls in a developer’s profit were nearly always eroded by the sheer presence rising rents or sales values (income). However, today’s development arena is a stark contrast. Post global financial crisis lessons feasibilities run on over assumptions or error will no longer be sufficient. This paper explores the range of options for practitioners involved in property development feasibilities, highlighting a number of conventional spreadsheet models currently available in the market. We find that although a conventional spreadsheet can be run to mimic the property development process, often they become a redundant or erroneous application on multiple projects scenarios. A transparent, standardized appraisal framework that is flexible and has the functionality to be easily scrutinized, such as the Estate Master Professional Property Software, is where one needs to be, especially as we are moving towards a world of joint-ventures and risk-avoidance. This paper may have the solutions you need to work profitably within real estate development.