product mix & price point summary
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Product Mix & Price Point Summary
ADAM GREENFADER
61 Cuerdas Vacant Tract of Land Boqueron, Puerto Rico April 3, 2004
____________________________________________________________________________
AXYON
Advanced Solutions For Real Estate Development
3
TABLE OF CONTENTS
GOAL OF THIS STUDY PG. 4
MARKET RESEARCH SOURCES PG. 4
ABOUT AXYON PG. 5
CURRENT ECONOMIC OUTLOOK PG. 6
MARKET AREA PG. 7-9
HOUSING SUPPLY & DEMAND PG. 10-11
KEY FACTS PG. 12
TARGET PROFILE PG. 13
CURRENT COMPETITION PG. 14-18
HIGHLIGHTED DEVELOPMENTS PG. 19-35
FUTURE DEVELOPMENTS P.G. 36
S.W.O.T ANALYSIS PG. 37-43
PRODUCT MIX ANALYSIS PG. 44-45
KEY DESIGN CONSIDERATIONS PG. 46-47
PRICE POINT ANALYSIS PG. 48-49
PRICE TRENDS PG. 50
COMPETITION TABLE PG. 36
CONCLUSION PG. 42
ADDENDUM
LUIS ABREU REPORT 2002 & 2003
JUNTA DE PLANIFICACION REPORT
AXYON PROJECT ANALYSIS
PROJECT BROCHURE HIGHLIGHTS
61 Cuerdas Vacant Tract of Land Boqueron, Puerto Rico April 3, 2004
____________________________________________________________________________
AXYON
Advanced Solutions For Real Estate Development
4
PRODUCT MIX ANALYSIS:
There are 2 product mix possibilities for Haciendas de Boquerón:
A) First home B) Second home
First Home Cabo Rojo is a fast growing region. As of present, there is a significant amount of first home product in the market. Haciendas de Boquerón has both the site and location for successful first home market absorption. First homes are for families. The demographics of the typical first home consumer is 28 to 45 years of age. The average family composition is two adults, one or two children, and a pet. First homes vary in size from three to five bedrooms. Haciendas de Boquerón homes should have a minimum of four bedrooms. This will help capture the move-up buyer who presently owns a three bedroom apartment or home.
The following measurements are recommended minimum size and for Haciendas de Boquerón:
Master bedroom: 13’ x 17’
Living /Dinning room: 14’x 24’
Kitchen: 13’x 10’
Family Room: 14’ x 14’
First homes require ample amounts of land. The average lot size in the market area is 486 M2. Many of the projects in Boquerón have lot sizes of 900M2 or more. Important Note: lot sizes should be 600M2.
61 Cuerdas Vacant Tract of Land Boqueron, Puerto Rico April 3, 2004
____________________________________________________________________________
AXYON
Advanced Solutions For Real Estate Development
5
Second Home The proposed site is located in Boquerón, one of the most environmentally pristine locations on the island of Puerto Rico. In Boquerón, there is an ample mix of both first home and second home developments. Haciendas de Boquerón does have the capability to attract a second home market. This will depend significantly on the projects ability to create access to the beach and bird sanctuary.
Upon careful examination of the product mix, we were able to arrive at the following conclusions:
Second homes projects are generally located directly in front of the beach or other prime recreation.
Second homes tend to have a larger variation of interior room distributions.
Second home valuations are approximately 18%-25% higher than similar product (size and finishings) of first homes.
In addition, a dynamic commercial area on road #101 will add the necessary amenities to make the development “second home friendly”. Interior space distribution for second homes emphasizes larger bedrooms – where families can “bunk-in”. Flexible space planning is also very important. .
Master bedroom: 13’ x 17’
Living/Dinning : 12’ x 21’
Kitchen: 9 x 10 ’
Second Bathroom: 6 x 12
Second Bedroom 12 x 14
61 Cuerdas Vacant Tract of Land Boqueron, Puerto Rico April 3, 2004
____________________________________________________________________________
AXYON
Advanced Solutions For Real Estate Development
6
RECOMMENDATIONS: KEY DESIGN CONSIDERATIONS
Product differentiation, through unique, environmentally sensitive design will allow Haciendas de Boquerón to become a distinctive community, and achieve the quickest and most profitable sell-out.
1. Community Facilities and Amenities: The community recreational facilities should be located at or near the front of the development. Standard facilities include a uniquely designed swimming pool integrated with a Jacuzzi and “kiddy pool”, one or more tennis courts, a full basketball court, a clubhouse with gymnasium, and children’s play areas. Environmental Study Center
In addition to these standard recreational amenities, we suggest the construction of an Environmental Study Center. The Environmental Study Center would allow residents to enter the protected mangroves adjacent to the site in an environmentally friendly manner. The center could be used as bird observation area, meeting place, and a variety of other functions. This could also include some form of exercise path for walking/jogging (utilizing the natural environment as an added benefit).
2. Community Front Entrance: “Curb Appeal” The front entrance of the community is incredibly important to the image of any development. Haciendas de Boquerón should invest a considerable amount in the development of this frontage. This area will also act as a buffer between the residents and road # 101. This will provide the added value of security and aesthetic beauty.
61 Cuerdas Vacant Tract of Land Boqueron, Puerto Rico April 3, 2004
____________________________________________________________________________
AXYON
Advanced Solutions For Real Estate Development
7
3. Boat Facilities:
In addition to the previous recommendation, these facilities should offer boat parking spaces. Research has demonstrated that, if available, buyers usually will pay a premium for this feature.
4. Security Measures: Security is the principal concern of clients today. Although not a major issue in our market region yet, the use of controlled access gates and a manned guard house will be a plus in sales. Our recommendation is not only to ensure 24 hour security personnel, making rounds, but we suggest that for each cluster of units, individual entrance gates be implemented within the community. This will offer a greater level of security for each resident.
61 Cuerdas Vacant Tract of Land Boqueron, Puerto Rico April 3, 2004
____________________________________________________________________________
AXYON
Advanced Solutions For Real Estate Development
8
PRICE POINT: NEW HOMES The below noted chart demonstrates the new home developments in the Cabo Rojo market.
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
New Home Developments
Mansiones de Cabo Rojo
Estancias de Villa Real
Villas de Sotomayor
Paseos de Plan Bonito
Paraiso de Mayaguez
Mansiones
Hacienda Libertad
Paseos Los Robles
Los Versalles
Las Casonas
Mansiones
Haciendas del Golf Club
Price Point
61 Cuerdas Vacant Tract of Land Boqueron, Puerto Rico April 3, 2004
____________________________________________________________________________
AXYON
Advanced Solutions For Real Estate Development
9
PRICE POINT: WALK-UP APARTMENTS The below noted chart demonstrates the walk-up apartment developments in the Cabo Rojo market.
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
Walk-Up Apartments
Los Corales
Puerta Azul
Rio Mar
Playas del Caribe
Villas de Sol
Villa Campo Mar
Torre Puesta del Sol
Haciendas del Gulf Club
Parguerazul
Boqueron Beach Villas
Price Point
61 Cuerdas Vacant Tract of Land Boqueron, Puerto Rico April 3, 2004
____________________________________________________________________________
AXYON
Advanced Solutions For Real Estate Development
10
PRICE TRENDS : LUIS ABREU The below noted chart demonstrates the price trends in new home developments for the Cabo Rojo market. As can be noted, in 2003, there appears to be a softening of the market. This appears to be consistent with data from other market regions.
$0
$50,000
$100,000
$150,000
$200,000
$250,000
1st Sem. 2002 2nd Sem. 2002 1st. Sem. 2003 2nd. Sem. 2003
New Homes
New Apts.
61 Cuerdas Vacant Tract of Land Boqueron, Puerto Rico April 3, 2004
____________________________________________________________________________
AXYON
Advanced Solutions For Real Estate Development
11
CONCLUSION: Notwithstanding historically low interest rates, new home purchases in the Boquerón market area are slow. Much of this is due to weak consumer confidence, a sagging economy in Western Puerto Rico, and an excess of housing supply. It is projected however, that by the time Haciendas de Boquerón is ready to deliver, much of the existing inventory should be sold. Haciendas de Boquerón’s site is excellent. The project has a 19 cuerdas dedicated to green areas. It is also adjacent to a beach and natural reserve. The highest sell out for the development will be to combine both the first and second home market. This should provide for a normal absorption rate of twenty-four to thirty-six months.
First Home Market data reveals that first homes should be the largest portion of the development. Sales prices of single family detached units should range from $185,000 to $225,000. It would be wise to divide the sales into several phases in order to capitalize on price appreciation. The single family units should be four bedrooms with an average size of 2,300 Sqft. In order to properly compete in this market, it is very important that the lots be 600 M2 or more. Second Home Second homes in the Cabo Rojo market are generally beach or golf front. Second homes can be extremely profitable – more density, smaller construction sizes, and higher prices. Although Haciendas de Boquerón is not located in front of either the beach or golf course, it can offer significant environmental amenities. If developed properly, 30% of the development could be sold as second homes. The second home unit should be multi-family – preferably low density. The unit should seek a sales price from $165,000 to $200,000. The average size should range from 950 Sqft. to 1,100 Sqft. Commercial Support The front portion of the Haciendas de Boquerón property is ideally suited for commercial support. Road # 101 is the main thoroughfare to the Balneareo as well as “El Poblado”. This might include uses such as a liquor store, pharmacy, fast food restaurant, boat shop, etc.
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