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QUESTION 2: FINANCIAL FEABILITY CASE STUDY CALCULATION Assess the financial feasibility of a large office development for one of your clients in Durban for a building loan application given the following information and assumptions of the site by: 1. Determining the yield. 2. Determining the profit for the office development should the development be sold at a capitalization rate of 10%. 3. Giving recommendations to client based on the outcome / answer of financial feasibility study. Known: 1.Site area. The site has two combined pieces of land, each measuring 2,625 m 2.Zoning: business rights 3.FAR: 0.5 4.GFA is equivalent to GCA 5.GLA is 4% less GCA 6. Coverage: 50% 7. Parking requirements: Two car parking lots each with 30 covered car parking bays on the ground level B.Size of one covered car parking bay: 7m by 5m per bay 9.Remainder of land on site is left for landscaping and paving 10. No existing structures, levels site Assume: 1.Building cost Offices: R6,500 per me Cover parking at ground level: R5,000 per bay Landscaping and paving on the premises: R80,000 External services. R50,000 2.Construction program: Pre-contract: 4 months Contract: 8 months 3.Escalation: Pre-contract: 0.3% per month During construction: 1% per month Cash flow factor: 0,60 Non-adjustable element: 15% 4.Land cost R2,800,000 5. Developer's fees. R500,000 6.Professional fees: 12% 7. Sundry costs: Legal fees: 90,000 Rates and taxes: R50,000 Letting fees: R40,000 Plan approval fees: R40,000 B.Interim interest: 14% per annum 9. Rental income: Offices: R120 per m" per month Cover parking: R100 per parking bay per month 10. Vacancy factor: 1% 11. Non-recoverable operating expenses: R20,000 TOTAL MARKS: 100 QUESTION 2: FINANCIAL FEABILITY CASE STUDY CALCULATION Assess the financial feasibility of a large office development for one of your clients in Durban for a building loan application given the following information and assumptions of the site by: 1. Determining the yield. 2. Determining the profit for the office development should the development be sold at a capitalization rate of 10%. 3. Giving recommendations to client based on the outcome / answer of financial feasibility study. Known: 1.Site area. The site has two combined pieces of land, each measuring 2,625 m 2.Zoning: business rights 3.FAR: 0.5 4.GFA is equivalent to GCA 5.GLA is 4% less GCA 6. Coverage: 50% 7. Parking requirements: Two car parking lots each with 30 covered car parking bays on the ground level B.Size of one covered car parking bay: 7m by 5m per bay 9.Remainder of land on site is left for landscaping and paving 10. No existing structures, levels site Assume: 1.Building cost Offices: R6,500 per me Cover parking at ground level: R5,000 per bay Landscaping and paving on the premises: R80,000 External services. R50,000 2.Construction program: Pre-contract: 4 months Contract: 8 months 3.Escalation: Pre-contract: 0.3% per month During construction: 1% per month Cash flow factor: 0,60 Non-adjustable element: 15% 4.Land cost R2,800,000 5. Developer's fees. R500,000 6.Professional fees: 12% 7. Sundry costs: Legal fees: 90,000 Rates and taxes: R50,000 Letting fees: R40,000 Plan approval fees: R40,000 B.Interim interest: 14% per annum 9. Rental income: Offices: R120 per m" per month Cover parking: R100 per parking bay per month 10. Vacancy factor: 1% 11. Non-recoverable operating expenses: R20,000 TOTAL MARKS: 100