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Project Sun Devil and Project Paris Case Solution & Answer

Project Sun Devil and Project Paris

SWOT for the Project Sun Devil:

Strengths:

The project’s strengths lie in its plan to provide a much-needed housing facility for the biggest university inthe U.S. The project is aimed to provide convenience to the students near Arizona State University ASU. The hosing facility is to be located near 1.5 miles from the main campus of ASU and also at a distance of 6 miles from Phoenix airport. The property planned for the housing facility was decided based on providing maximum convenience to people including shopping centers, easy access to transportation, nearest healthcare centers, etc. Besides that, the property is 95% leased and has the potential to generate a good number of students to avail of this housing service.

Weaknesses:

It could be considered as a weakness to Sun Devil that there is a comparative advantage to the potential competitors for being located near the university main campus ate shorter distance as compared to Sun Devil’s distance. Also, since this project is new and the already existing market players i.e., the competitors have effective pricing strategies, although the pricing for Sun devil would be preferred to be relatively lower, how ever because of the reason that its competitors are very older market play they could afford lower pricing than Sun Devil so their prices would be expectedly low with more amenities available by them. The university is known as a ‘party-school’ so there is a possibility that it could create hindrances in the property’s management for the project.

Opportunities:

The project has got the opportunity for being sourced from the American Student Properties (ASP) and it would provide a lot of benefits and good capital for the investment. This help was possible because the project advocate tony is personally related to ASP. It is expected for the Project Sun Devil to catch tenants from other universities mainly MCC and SCC other than ASU. Based on the analysis done by RREEF there is a great market potential for Student housing-based real estate because of its higher demand. Besides all these facts, the project also has demographic advantages according to the historical trend-based analysis.

Threats:

Because of the great market potential, the number of competitors in the market was significantly increasing. Ultimately the market supply was increasing and demand was declining because of higher supply. Relative red flags in the project development indicating to turn the project into senior care rather than student housing-based facility. It is also a threat to the project that all the nearest possible locations near the ASU were not available.

SWOT for the Project Paris

Strengths:

Project Paris’s strengths lie in the fact that for the year 2010 Le Meilleur is considered to be the biggest market player in the real estate industry so by investing in the acquisition of this company the HSC would be get benefited from all the benefits that Le Meilleur enjoys as the biggest market player with largest market share. In the year Le Meilleur was the top four real estate broker. The company also had strong financials ultimately providing a strong financial forecast for Project Paris as well. The company enjoys good and strong relations with its suppliers.

Weaknesses:

It could be considered as a weakness to Project Paris that the external services are 28 percent of costs whereas Personnel services have 47 percent of the costs. The expected returns of Project Paris are lower as compared to the higher capital investment it requires. The company has poor procedures of waste management and it is possible that it could lead to extreme criticism which ultimately would impact the project negatively.

Opportunities:

The increasing market size of the industry could be considered to be an opportunity fir the project to generate high returns from the company after the acquisition. Besides this, the potential of increasing the value proposition could also be beneficial for the project. All these facts are depicting the significant increase in disposable income of the consumers.

Threats:

The real estate business has to face a lot of threats that are unavoidable. First of all, there is an increasing number of competitors with effective and efficient marketing strategies. This increasing number is because of the reason that there are no barriers to entry in the real estate industry and anyone could enter the market at maximum convenience. significant and strict policies and regulations implemented by government institutions are also threat real estate business.

Conclusion and Recommendation:

Both the projects under consideration look promising with great potential for returns and growth. But since the HSC could only in one project out of these two, the HSC is suggested to invest in the Project Sun Devil because it has a higher IRR, and a compared to the other project this project seems to be more promising with substantial growth chances because of increasing market demand in the student housing. Also, by going for this project HSC would be able to get benefited from ASP support……

 

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