Viability of the development and guarantee of real estate capital

Case Study: Real Estate Developer

A company dedicated to real estate employed the services that LAC offers to find out the viability of various real estate projects in different cities in Mexico. The objective of the study was to determine the size of the market according to the characteristics of prospective clients, who live and work in the geographic locations of the projects, as well as other particular specifications, such as benchmarking, analysis of consumer needs and competitors that vary with each site. In this way, the company would ascertain the viability of their business and would be able to work in a more suitable setting to strengthen their capital.

The research and analysis were carried out in 3 different places: Guadalajara, Ajijic, and La Laguna. The purpose was to find out the viability of the different real estate projects and develop a detailed profile of the target market and direct competitors. In addition, to map the complexity of the competitive environment, it was crucial to define the appropriate variations and competitive advantages, so that the chosen segment received a different and relevant value offer.

The applied study aimed to develop a detailed profile of the target market by describing a series of quantitative and qualitative traits that allowed the organization to better understand the dynamics that drive the consumer behavior of the target market. This information was used with the focus of developing activities that would enhance the company’s results and provide a framework for understanding their strengths and disadvantages. A general analysis of the macroeconomic and housing situation in the direct zone and in the respective cities, of relevance to the development, was carried out in order to understand some of the trends or problems that existed and that were pertinent to the project. Once insights were gained into what was happening in the context and the impact on the project, an analysis of the closest competitors, who also had and significant impact on the project, was carried out. Likewise, an analysis was carried out of the flow of migration to the city of prospective foreign consumers, which could be added to the list of potential buyers.

  • La Laguna: the findings show that the sociodemographic structures are more suitable for a traditional family market segment. The growth of areas that generate employment had been drawing in this profile of consumers, making them attractive prospective clients for real estate developers in the region. An assessment of the current state of construction indicates that in the medium-long term there will be a surplus of housing. This suggests growing competition that is especially strong in the sectors of interest. In general, there is a sustained trend towards the development of gated residential estates, where certain characteristics such as the inclusion of private gardens within the residence, open common spaces for outdoor activities, personal parking spaces, and a number of rooms and bathrooms suitable for a family or planned family, stand out as the most relevant factors governing purchase decisions.
  • Guadalajara: the segment of consumers that was shown to be relevant are known as DINKS (double income, no kids), which refers to couples or co-inhabitants of a household that both earn an income, generally professionals, and do not have children or direct economic dependents. This is because consumers in this profile prefer spending on more luxurious items since they look for and are able to access a more comfortable lifestyle, due to their high purchasing power. This is the most dynamic of all of the analyzed urban spaces: a larger market and significant capital investments that continue to attract the flow of migration to the relevant market of interest. Despite this, there is also a greater quantity of competitors and a greater variety of value propositions, creating a broader real estate offer, although one which is not always well directed to the target audiences. The relevant distinguishing features push for a modern concept and an attractive design, following a construction trend of vertical developments. In addition, important amenities such as security (gated estates or tower blocks), parking, access to a patio or terrace, garden, and full kitchen were highlighted. The findings showed that there were also less relevant distinguishing features, which tended to make current prices more expensive (resulting in decreased buying interest), such as gyms or highly specialized shared spaces. 
  • Ajijic: The most relevant niche was that of adults and older adults, mainly Americans. This is highly relevant because this area appears to be an attractive location to move to during retirement. In addition to conducting a sociodemographic profile investigation, key American states were identified where specific activation efforts can be carried out using Big Data analysis tools. As for the competitors, the density of economic units is less saturated than in the other areas that were analyzed; however, established contenders with strong value propositions for the target market pose a high threat. Delving into the characteristics of interest regarding real estate proposals, the target segment generally looks for a location where they can feel safe and that does not need private surveillance and where swimming pools are seen as a strong addition, preferably with an all year round temperature controlled system.

The real estate market has been undergoing a great deal of change in Mexico in recent years. On the one hand, there has been a modernization of the supply and demand contact channels along with the demographic and social evolution of urban concentrations in the market, while on the other hand there have been construction trends such as vertical developments, residential complexes, and mixed uses. 

After the analysis of direct competitors and consumers, it was possible to design the ideal development that fulfills consumer desires and that is different from what competitors already offer. This is complemented with the implementation of research tools that enable exploration and examination of the factors, characteristics, and amenities that are truly relevant in the purchasing process, and that lead to the creation of the most appropriate value offer without exceeding the amount consumers invest.

If your industry is the development, construction, and marketing of real estate, with LAC research and analysis you can:

  • Determine the appropriate location and site for your real estate project.
  • Get to know the competitors in the area in order to offer a product with competitive advantages and distinguishing features.
  • Identify various areas in the city with similar behaviors and markets.
  • Make use of large databases to know the characteristics of your market in detail.
  • Know the rate of land use and occupation to determine the viability of your real estate project.
  • Identify niches that remain untapped by your competitors.
  • Access advanced research insights into the key preferences of your target market.
  • Anticipate the relevant investment costs for your projects.

Contact information: 

  • Linked In
  • Click to download the original PDF

    Leave a Reply