SWOT ANALYSIS
Single Family Residential Community
BY ADAM GREENFADER
TABLE OF CONTENTS (SUMMARY)
INTRODUCTION Executive Summary
…………………………………………4
Market Analysis Certification
…………………………………………6
Goal and Scope of the Diagnostic Analysis
…………………………………………7
Market Research Sources
…………………………………………8
General Assumptions
…………………………………………9
SECTION 2: Bosques de La Sierra Key Facts
…………………………………………21
Project Location
…………………………………………24
SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats) Strengths
…………………………………………33
Weaknesses
…………………………………………43
Opportunities
…………………………………………47
Strengths
…………………………………………48
Units (3/2, 4/2, 4/2.5)
…………………………………………49
SECTION 2: THE PROJECT
Key Project Facts City: Location: Access: Site: Zonning: Flood Area: Neighborhood Characteristics: Key Location Amenities: Proximity to Caguas: Location Summary: Location Grade: Developer: Developer Experience: Financial Institution: Mortgage Institution: Architects: Total Units: Project Type: Community: Curb Appeal: Model Units : Design Style: Actual Age: Site Work Start: Construction Start: Observable Easements: Infrastructure: Legal Infrastructure: Energy Efficient Items:
Caguas , Puerto Rico Km. 2.3 PR 765, Off Road #1 Approximately 7 minutes to Highway 30.12 Cuerdas (1 Cuerda equal to .97 Acres) RA 1 – RA-3 No - FEMA Map #720000-0179-B (Zone X) Residential, 50% built up, sub-urban, middle-class neighborhood Small Retail Establishments 10 minutes Challenging access from highway but not proximate to any major amenities 2 (1 being lowest and 5 being the best in market) Jardines de Borinquen, Inc. Moderate experience Doral Bank Doral Mortgage Juan Rodriguez Claudio, Engineers 182 original project 130 units 3rd revision – 120 built Single family residential units - detached Abundant recreational facilities, guardhouse, landscaping. Good - entrance area, street scaping, and retention pond Ebano (3/2), Ausubo ( 4/2), Flamboyan (4/2.5) Contemporary New Construction 3 Quarter 2005 (36 months) 1 Quarter 2006 ( 11 months to 1st delivery) Electrical, Water, Telephone, Sanitary. Public Utilities and services, Asphalt roads. HOA, Architectural Guidelines, & Restrictive covenanats. Intelli- Home , capacity for solar heater
Key Sales Facts Unit S.F. :
Ebano (1,844 S.F.), Ausubo (2,119 S.F.), Flamboyan (2,390 S.F.)
Avg. M2
Ebano (397 M2), Ausubo (965 M2), Flamboyan (437 M2)
Avg. Price / S.F. :
Ebano ($260,232 / $141), Ausubo ($333,240 / $157) Flamboyan ($312,070 / $131)
Reported Closings:
67 out of 130 (51%)
Closing Avg. :
Ebano 18/27% ($253,507 / $137), Ausubo 21/32% ($284,822 / $134) Flamboyan 26/40% ($303,00 / $127)
Sales Incentives (Non-Gov.):
$5,0000
Inventory:
53 Units- Ebano (36 units – 68%), Ausubo (11 units 21%), Flamboyan (6 units 11%)
Absorption Rate:
December 06 - 2.8 Units Per month
Ownership:
Fee Simple
Product Staging: Sales Team:
Good - Model House decoration, and landscaping. N/A
Data Sources:
Developer and Field Inspections
Date of Inspections:
10/15/2008 – 11/23/2008
S.W.O.T. Analysis The S.W.O.T. (Strengths, Weaknesses, Opportunities and Threats) Analysis is performed in order to establish the main attributes of the proposed project from a marketing perspective. The S.W.O.T. Analysis attempts to uncover those elements that prospective clients (end users) will evaluate in their purchase decision.
Strengths: attributes of the project that are helpful to achieving the objective. Weaknesses: attributes of the project that are harmful to achieving the objective. Opportunities: external conditions that are helpful to achieving the objective. Threats: external conditions which could do damage to the project’s performance.
By understanding a project’s Strengths, Weaknesses, Opportunities and Threats a project can improve its sales performance. In order to accomplish this task, the following questions should be asked:
How can we use each Strength? How can we improve each Weakness? How can we exploit each Opportunity? How can we mitigate each Threat?
Following, you will note a table with the SWOT analysis of Bosques de La Sierra. The S.W.O.T is divided into two parts: the site and the home models. The list is not in order of importance nor is it intended to be exhaustive. Photographs and architectural drawings highlight key areas.
S.W.O.T. Project (General)
Strengths
Weaknesses
Main Entrance ( Curb Appeal)
Road Access To Project
Guard House
Construction Equipment
Recreational Facilities
Lack of Street Scaping (2nd phase)
Site Plan
Location of Model Houses
Mountain Vistas
Inventory Control
Project Maintenance
Road Access to 2nd Phase Permanent Signs (Branding) Residents Satisfaction (DACO)
Opportunities
Threats
Improvements to PR 765
Current Inventory
Low Interest Rates
Puerto Rico Recession
The Election
U.S. Housing/Financial Crisis
Inflationary Costs of Construction
High Loan to Values (Tight Credit)
Access to Caguas Metropolis
Buyer Incentive Deadline (2008)
S.W.O.T. Table - Site
S.W.O.T Analysis Strengths: Strengths are Positive aspects inherent to the site or development.
Main Entrance: Strength Bosques de La Sierra is located in a valley surrounded by mountain ranges. Upon arriving to the project one is met with a large retention pond, and lush landscaping. The retention pond has been well designed with a walking path, attractive sitting area, and a fountain (the fountain was not functioning at the time of the writing of this report).
Retention Pond
Entering the project, one is met with 4 vehicular car lanes, a palm tree lined divider, and abundant ficus trees buffering Bosques de La Sierra with its neighbors. The curb appeal is powerful and makes a strong statement of arrival.
Main Entrance
Entrance Landscaping
Guardhouse: Strength The main guardhouse is similarly grand in scale and well finished. It has two security gates, electric arms, and the attractive street scaping.
Guard House
Street Scaping
Recreational Facilities: Strength The recreational facilities consist of approximately 5,940 square meters. The facilities are located directly adjacent to the guard house.
Guard House and Facilities Location
The facilities are well located and include: 1. Swimming pool (heated) 2. Full basketball court 3. Children’s play area 4. Club house with kitchen facilities 5. Gazebos & covered terraces 6. Office space 7. Storage areas 8. Fountains 9. Showers 10. Bathrooms (Indoor and Pool Side) The recreational facilities provide an extraordinary amount space for a community of Bosques de La Sierra’s size.
Recreational Facilities
Covered Terrace and Kitchen Area
The facilities are well maintained and have good security fencing around the pool. The pool area has patio furniture and safety signs.
Children’s Play Area
Full Basketball Court
Site Plan: Strength The site plan consists of approximately 30.12 cuerdas. The area is segregated into 137 lots. The lots are divided into individual blocks. The blocks are identified from A-M. In each block there are three (3) different home models. The site plan includes many corner lots, winding streets, and takes advantage of the beautiful mountain vistas.
Mountain Vistas: Strength The project lies in a valley. The valley is surrounded by low level mountain ranges. The mountain ranges surround the project and offer beautiful vistas for most of the home lots.
Mountain Vistas
Project Maintenance: Strength Bosques de La Sierra is well maintained. The grass and landscaping is trimmed and appears to be watered regularly. The unsold inventory is clean and painted. The recreational facilities and model homes are likewise well kept.
WEAKNESSES: Weaknesses are Negative aspects inherent to the site or development. Access to Project: Weakness After exiting the highway, Bosques de La Sierra is accessed via three narrow single lane roads 1, 765, and 763. The route is approximately 3 miles and takes approximately 7 minutes to get to the project - when there is no traffic. During peak traffic hours getting to the project can take anywhere between 15-25 minutes.
Access to Project
The roads are scattered with commercial, industrial, and retail establishments. In particular, the area is known for famous “Lechon� restaurants. The restaurants get very crowded on weekends and holidays which further ads to the traffic congestion.
Typical Restaurant Establishment
Construction Equipment in front of guardhouse: Weakness At the end of the project’s entrance(right before turning left to the guardhouse) there’s construction equipment, workers’ cars, and other unsightly debris.
Construction Equipment At Entrance
Inventory Control: Weakness Approximately 15% of the project is still not fully completed; homes without paint, final finishings and windows/doors; site work lacking electricity, landscaping, and perimeter fencing.
View from Street 5
The uncompleted work is unsightly. Since the majority of sales inventory is located in said sector, careful attention should be paid to separate completed units from those still pending work.
No trees or palms planted on sidewalks: Weakness Although there is grass on the sidewalks, there are no trees in the 2nd phase of the project. This makes the un-sold inventory look less appealing. Moreover, the name “Bosque” (forest in Spanish) creates an expectancy of a lush green ambiance.
Limited Permanent Signage (Branding): Weakness There are very few permanent signs in the project that help to create a brand. There are no permanent signs at the entrance, on the streets, or houses. The community feeling needs to be reinforced.
Customer Satisfaction: Weakness Customer satisfaction and referral sales are a key indicator of a project’s success. On two homes in Bosques de La Sierra there are large signs claiming construction defects. There are several unsubstantiated claims that several residents have submitted their cases to the consumer affairs department (Spanish Acronym D.A.C.O.). All claims should be settled as quickly as possible.
Consumer Affairs Cases
S.W.O.T. Analysis Opportunities: Positive influences outside the control of the development team. Low Interest Rates: Opportunity Interest rates continue at historic low levels. This cheap cost of money makes the purchase of a new apartment even more accessible. REIT Laws House Bill 3038: Opportunity Another investment instrument eagerly awaited by local investors has been the passage of House Bill 3038. The House Bill 3038 will extend to Puerto Rico the tax benefits enjoyed by REITs in the mainland to local capital. UBS managing director, Francisco RodrĂguez Castro, contends that HB 3038 promises to become an engine for economic growth. The Elections: Opportunity In November of 2008, both the United States and Puerto Rico elected new government leaders. The elections might be a catalyst for improved consumer confidence. Anti-Development: Opportunity There is currently an anti-development trend in Puerto Rico. The government has limited permits for new projects and has even revoked permits while projects are under construction. This trend will only make projects that are already completed more attractive. Inflationary Costs of Construction Materials and Labor: Opportunity Construction materials and labor in the last couple of years have skyrocketed. Overall construction costs for a new apartments have increased approximately 30%. This makes the construction of new homes even more expensive and will thus provide a competitive advantage to existing inventory.
S.W.O.T. ANALYSIS THREATS: Negative external forces that the developer cannot control. Home Purchase Government Incentive Expiration: The Government Home purchase incentive is to expire at the end of 2008. The incentive has helped stimulate over 7,000 new home sales. The sales have principally been in the $250,000 or below target market and could negatively affect the proposed project. Inventory in Pipe Line: Threat The Cupey-Guaynabo Market Area currently has a glut of projects. This includes projects that have finished units and those that are under construction. There are currently seven hundred and thirty-five (735) units in inventory. Puerto Rico Recession: Threat Puerto Rico is currently in a self created economic recession. Most would agree that the recession is mainly a result of internal political strife, poor long term planning, inept financial management and a shift in economic relations with the United States. US Housing Crisis: Threat With the recent government bail out of Fannie Mae and Freddie Mac, most economists would agree that the US housing market crisis will continue to deteriorate. Puerto Rico typically follows the economic cycles of the U.S. U.S. Financial Crisis: Threat The housing crisis has led to a general financial crisis. This crisis has extended to both the United States and abroad. On September 15, 2008, Lehman Brothers, one of the nations oldest investment banks declared for bankruptcy protection. On the same day, Merrill Lynch was sold to Bank of America. Other mega institutions such as AIG and Citicorp are reportedly also in dire financial troubles. High Loan-to-Value: Threat The Puerto Rican financial sector has suffered dramatic setbacks since 2006. This has created a lending environment with tighter credit restrictions and higher loan-to-value ratios. Although Puerto Rico was not directly a participant in the sub-prime fiasco, the problems on the mainland have adversely affected the island.
S.W.O.T. – Home Models (All Models) The three (3) home models have universal home Strengths and Weaknesses. We shall cover them below and then addresses the specifics of each model.
Universal Strengths
Universal Weaknesses
Multiple Home Models
No Covered Terrace
Kitchen Cabinets & Counter Tops
8’ Ceiling Heights
Security Windows
Limited Windows
Double Entrance Doors
No Garage Expansion
All Glass Corner Windows
Small Living Rooms
Moen Sanitary Equipment (Some)
No ½ bathroom in single
Large Floor Tiles 18” x 18”
story models
Marble Bathroom Counter Tops Over The Counter Sinks Electric Transformer Switch
S.W.OT. Analysis Universal Traits
The Universal Strengths of the models are: Multiple Home Models: Universal Strengths There are a total of 3 different home models. Two of the models are single story. The single story models have 3 and 4 bedrooms. There is also a two-story model with 4 bedrooms. This variety offers several options to prospective clients and expands the potential target market.
Flamboyan Mode l- 4 Bedrooms & 2.5 Baths (2,390 S.F.)
Ebano Model - 3 Bedrooms & 2 Baths (1,844 S.F).
Ausubo Model - 4 Bedrooms & 2 Baths (2,119 S.F.)
Kitchen Cabinets & Counter Tops: Universal Strengths All the homes have excellent kitchen cabinets and counter tops. The cabinets are well designed and provide for ample storage. All Glass Corner Windows: Universal Strengths The homes have unique corner picture windows. The windows add a modern design to the homes and offer good visibility. Security Windows: Universal Strengths The windows in the homes are a combination of picture windows and aluminum hurricane windows. The hurricane windows have the advantage of serving as black out shutters – when the windows are closed there is no need for blinds.
Security Windows
The windows are manufactured by Air Master. Air Master is one of the island’s leading window manufacturers.
Double Entrance Doors: Universal Strengths The homes all have double entrance doors that are made of aluminum. The aluminum doors last longer than wood and do not need constant maintenance.
Double Entrance Glass Doors
Grass in Yard: Universal Strengths Industry standard is to provide grass within a limited area surrounding the home. The distance is usually reserved to an area of 3 feet. All the homes at Bosques de La Sierra are 100% covered. Moen Sanitary Equipment: Universal Strengths Many of the faucets are by the reputable company Moen. The Moen Brand is well known for quality and unique designs. Large Floor Tiles: Universal Strengths The homes all have large ceramic tiles. The tiles measure 18” x 18” and are imported by Ital Ceramica. Marble Bathroom Counter Tops: Universal Strengths The bathroom counter tops are elegant and made of white marble. The stone is cut in place and ads much luxury to the bathroom.
High Quality Bathroom Equipment
Over The Counter Sinks: Universal Strengths The fashion today in sinks is that they be “over the counter.” The over the counter sinks come in many styles and materials. This is a value added benefit that is greatly desired by the home buyers.
Energy Ready System Universal Strength The homes are all prepared for an electrical generator, water cistern, and solar water heaters.
The Universal Weaknesses of the models are:
No Covered Terrace: Universal Weaknesses The home does not have a covered terrace. The majority of competitors include areas where home owners can sit outdoors while protected from the elements. This is a significant competitive disadvantage.
No Covered Terraces
8’ Ceilings: Universal Weaknesses The ceiling heights are 8 feet. This is a minimum height for homes in Puerto Rico. Many of the competitors, however, are offering 9’ ceiling heights with some expanding as high as 14’. The ceiling height ads much clarity and is a significant advantage in a hot climate.
Limited Windows: Universal Weaknesses The home models have a limited amount of windows in the living and dining rooms. Below you will note the long hallway effect and the corresponding lack of luminosity.
Limited Windows & Luminosity
Bathrooms to Bedroom Ratio: Universal Weaknesses The bathroom to bedroom ratio is the bare minimum. Neither the Ebano nor Ausubo models have a ½ bathroom or powder room.
Below you will find a table with the Strengths & Weaknesses for each individual model.
3/2 Strengths ( Ebano)
Open Floor Plan Design Separation of Bedrooms & Public Space Private Master Bedroom Large Windows In Master Flexibility for Expansions
4/2 Strengths (Ausubo)
Kitchen Cabinets & Counter Tops Family Room ( Corner Window) Garage Interior Garden Large Laundry Room Guest Bathroom Location Master Bathroom & Closet
4/2.5 Strengths (Flamboyan)
Pantry in Kitchen 1st Floor Open Design 2nd Floor Laundry Room Very Large Master Bedroom Master Bathroom
3/2 Weaknesses ( Ebano)
Small Master Bathroom (1 Sink) Small Bedroom #3 Limited Linen Closet No Powder Room (½ bathroom)
4/2 Weaknesses (Ausubo)
Limited Windows and Light Small Living Room Kitchen Location Circuitous Hallways No Powder Room (½ bathroom)
4/2.5 Weaknesses (Flamboyan)
Small Living room Garage Access
3/2 Single Story Model (Ebano): Strengths Kitchen: Strength The location of the kitchen flows easily from the garage/laundry to an informal eating area capable of sitting two (2) stools. The kitchen has ample cabinets, excellent counter top and good visibility to the out doors.
Open Kitchen Design
Open Floor Plan Design: Strength The open floor plan creates a feeling of space and expansiveness. It allows the home resident to creative decorate the home. Separation of Bedrooms and public Spaces: Strength The home is carefully divided between the public spaces and private (bedrooms). This configuration allows the home owner the ability to entertain while other members of the family rest comfortably away. Master Bedroom: Strength The master bedroom is located in the rear of the home. It is in a good private location at the end of the hallway and faces the backyard. It is a good size and has multiple bed positioning areas. The bedroom also enjoys a very large picture window.
Flexibility For Expansion: Strength The home has the possibilities for several expansions. The most important being the creation of a covered terrace area. There are two possibilities; behind the house or adjacent to the kitchen. The latter seems to offer unique opportunities to maximize the lot size/configuration.
3/2 Single Story Model ( Ebano): Weaknesses
Master Bathroom: Weakness The master bathroom has only 1 sink. The single sink option does not differentiate this room from the other bathroom. The sink is neither separate from the bath, toilet, or bidet.
Small Master Bathroom
Small Bedroom 3: Weakness The bedroom #3 is the minimum size for a non-subsidy unit. The room measures 9’2� x 10. Linen Closet: Weakness The linen closet is small and does not provide much space for storage. No Powder Room: Weakness The Ebano model has only 2 bathrooms. While adequate for a first time buyer market, it is not industry standard for a move-up market. Most of the competition offer a half bathroom or powder room.
4/2 Single Story Model (Ausubo): Strength
Family Room Picture Frame Windows: Strength The family room corner has two picture frame windows. The windows add a unique flare to the design of the house.
Master Bathroom & Closets: Strength The Master Bathroom is large and well designed. It has a separate area for the toilet/bath from the sinks. The sinks are over the counter and there is ample counter space and cabinets. The master closet is similarly large and well located.
Large Master Bathroom
Garage: Strength The garage has a storage closet and interior garden. In addition, it has room to create an additional closet if desired. Laundry area: Strength The laundry area is large and expansive. It is located in the hallway enclosed with mirrored doors. It fits washer and drier side by side, plus a sink. 2nd Bathroom /Guest Bathroom: Strength The 2nd bathroom is located inside the “private area” of the house just past the laundry but easily accessible to guests. 4/2 Single Story Model ( Ausubo): Weaknesses
Limited Natural Light: Weakness As noted above, the single story homes have small and limited windows. In particular, the Ausubo Model has few windows in the living and dining room. This makes the area dark and creates a “hallway effect.”
Living Room: Weakness
The living room’s size is 12’8” x12’. It is located in the front of the house directly adjacent to the main entrance. The main entrance has double doors. The double doors require a circulation path that diminishes substantially the usable area of the living room. This in turn, makes the placement of furniture uncomfortable.
Kitchen location: Weakness The kitchen is located in the middle of the house, next to the dining room and family room. It has only one window and has no direct access to the back or side yards. Circuitous Hallway: Weakness The bedroom hallway is T shaped. This makes for uncomfortable circulation. No Powder Room: Weakness The Ausubo model has only 2 bathrooms. While adequate for a first time buyer market, it is not industry standard for a move-up market. Most of the competition offer a half bathroom or powder room.
4 / 2.5 Two Story Model (Flamboyan): Strengths Kitchen Pantry: Strength The Flamboyan kitchen offers an attractive pantry. The pantry is walk-in and finished with attractive wood panels.
Walk-In Pantry
1st Floor Open Design: Strength The 1st floor is designed with an open floor plan. The plan allows for various decoration alternatives. There is plenty of space under the staircase for storage. Laundry Room in 2nd floor: Strength The laundry room is well designed and located on the second floor. This location makes cleaning convenient. It also has a comfortable top shelve for storage.
Master Bedroom: Strength The master bedroom measures 19’x 13’. In addition to being large, the room’s space efficiency factor is excellent. Both the bathroom and closet are located adjacent to each other and do not detract from the usable area of the room. The bedroom also boasts two very large picture windows. The windows help to bring the outdoors inside.
Master Bedroom With Picture Windows
Master Bathroom: Strength The master bathroom is well designed. While not excessively large, it does offer excellent finishings such as over the counter sinks, Moen faucets and a very comfortable whirlpool bath tub/shower.
4 / 2.5 Two Story Model (Flamboyan): Weaknesses
Small living Room: Weakness The living room in the Flamboyan is located off the main entrance and is divided from the rest of the house by the main staircase. The furniture in the living room must be positioned away from the entrance hallway and staircase nook.
Broken Interior Space
Weak Garage Access: Weakness The access to the home from the garage is via a door that leads directly into the living room. This access is not practical when bringing groceries into the kitchen.
CONCLUSION Bosques de La Sierra is located in the Municipality of Caguas in Puerto Rico off of road #765. Road #765 is a small two lane mountain road. The roads accessing the project are in poor condition, poorly illuminated, and often congested with traffic. Thus, while not far from the Caguas Metropolitan Center, Bosques de La Sierra is hindered by its vehicular access. Its location is thus considered one of the weakest in its market area. Bosques de La Sierra is located on 30.12 Cuerdas (29.21 Acres). The land is situated in a valley and rolling hills. Little natural vegetation remains on site but there is much greenery to the south. The site is zoned RA-1 – RA 3. The land is not located in a flood zone (Zone X). The project commenced the site work in the 3rd Quarter of 2005 and vertical construction began approximately six month thereafter. The project underwent several revisions and now consists of 130 single family detached residential units. 92% of the units have been built. The units consist of three (3) models. The models range from 1,844 to 2,390 S.F with 3 and 4 bedrooms. The homes are built of concrete and have all the necessary public utilities, electrical, water, sanitary and telephone infrastructure. Bosques de La Sierra has closed 67 homes or 51% of the total inventory. The total closings amount to $19,114,712 or $285,294 per unit. The absorption rate has been approximately 2.9 units per month. The project’s principal strengths are its recreational facilities, main entrance, multiple home models, mountain vistas, finishings, windows, sanitary equipment, and maintenance program. The project’s principal weaknesses include the road access to the project, vehicular circulation control, lack of landscaping in 2nd phase, no covered terraces, 8’ ceiling heights, limited windows, and an absence of project branding. There are currently 10 projects that compete with Bosques de La Sierra. All the projects are located within a 30 minute drive of each other. They are located in the Caguas Municipality (principal market) and in the Municipalities of Gurabo, Juncos, San Lorenzo, and Las Piedras (secondary market). The prices start at $227,000 and tops off at $301,000. The average price for a 3 bedroom unit is approximately $244,429 after discounts. The average price for a 4 bedroom unit is approximately $269,918 after discounts. When viewing the residential projects by price per square foot (SF), one can notice a price variation from $92 to $135. The average price per square foot of a 3 bedroom unit is $120. The average price per square foot of a 4 bedroom unit is $117. The competition’s homes range in size from 1,844 S.F. to 2,685 S.F. The Bosques de La Sierra homes are generally smaller in size than the competition. Moreover, the competition also has covered terraces, ceiling heights that range from 9’-14’, and ½ bathrooms. Overall, the competitions’ homes are superior.
The competition’s facilities usually include a gazebo, pool (showers), and children’s play area. Bosques de La Sierra’s recreational facilities include all of the above plus a large club house, multiple covered terraces, and full basketball court. Bosques de La Sierra’s recreational facilities are superior. The total housing demand for the five year period (2007-20012) is projected at 49,887 units or 11,022 units annually (non-subsidized). The Bosques de La Sierra market area (Caguas Region) makes up approximately 9.3% of the total demand of all Puerto Rico. Hence, the total demand for this region is 4,639 units or 928 units per year. Single-family units account for 71% of the total units demanded. Using the weighted average from the past sale activity, the market demand is estimated at 3,294 units or 658 units per year. 26% of the demand is for homes in the $210,000 or more range, or 856 or 171 units per year.
Best & Worst Case Table
2%
Optimistic
0 % Conservative
-2 % Pessimistic
$ 261,000
$242,000
$242,000
$ 223,000
2008
2009
2010
2011
2012
There is a total inventory of 426 units in the Caguas Market Area. This inventory includes new homes that are completed and under construction. The average absorption rate for this market group is 2.2 units per month. Based on this slow absorption rate, many projects have curtailed their development plans. If we assume that the proposed project can capture an equal market share to its percentage of the total supply, it should command a capture rate of 10.6% (53 units of
the proposed project / 426 assumed total available units + 70 new units). The proposed project’s absorption rate should approximate 18.1 units per year or a total project sell out in 2.9 years. The principal target market demographics consist of first time buyers and move-up market. The sales strategy should be to reduce prices to competitive levels, improve project merchandizing, and control inventory. Special consideration should be given to 40 year mortgage amortizations and reduced interest payments for the first couple of years.