“Location, Location, Location”
By the time we have factored in the $2Billion initial investment from large and small businesses plus overpay for companies which cannot project a 40% return by 2018, and added the initial $1Billion reinvestment the total investment will be in the region of $3.5Billion
From this, $500Million for university operations is deducted, along with roughly the same for building and equipping the university, hospital, sports village and other municipal buildings. Added to this is investment money that goes directly to industry. For example, the energy companies that invest will own the solar arrays they purchased or manufactured.
All told, a figure in the region of $2Billion will be left, if there is money over, the initial reinvestment will be less, if under the reinvestment will be more, so making an even $2Billion.
As an example, at a cost of $100Million a suitable 9 square mile mixed usage plot of land has been identified in Orlando, Florida. Half the land is preserved for nature, added to this roads, mandatory buildings, and car parks need to be accounted for, then the remaining land value is approximately $50,000 an acre, which may sound inexpensive, as in general like for like developed land in Orlando costs around $800,000 an acre.
However, budgeting estimates need to allow for infrastructure (roads, plumbing, cycle paths, bridges, CCTV cameras, etc). Infrastructure costs are in the range of $600Million for the first 4-year phase. Thus the effective land price is $650,000 an acre, leaving $1,35 Billion for building homes, malls, retail areas and attractions
Currently in Florida, the average land vale as a portion of property value is equal to 30% of the value of the home, therefore the above land + infrastructure costs vs. home construction costs seem as they should be. It is worth noting in strong economic areas such as Washington DC the land value is closer to 75% of the home.
Despite the recent failed property development in Spain and Ireland the reasons for which are unique to their own economies, property developments are still being built all over the world including the USA. If they did not make profit they would not build them, therefore it is reasonable to assume if one spends $2Billion on a property development one would logically anticipate breaking even. That will be our starting point: a new property development expected to make neither profit nor loss.
Before moving on to “Locations Butterfly”, an important factor needs to be pointed out, which effectively means the resort development is economically sound.
This point will be framed within a question so as to evoke reasoning:
Have you ever heard of a real estate or resort development, which did not rely on selling houses?
The properties are owned by the companies that invest, long term capital asset investments which are effectively a bonus to the trading rights, shared future technologies, branding and in general not wishing to fall behind.
Two-thirds of the villas are either lived in by their new owners or placed within a subsidized rental pool, and the balance sold at cost to those on “Spartan Contracts.” This does not mean people can’t buy homes, if there is a demand more will be built, and profited from, but said profits are not an integral factor to success just a bonus, thus if the resort does not sell a single home, it will still be a financial success.
Welcome to the interactive “Locations Butterfly”
Once again we see our “butterfly effect” circular events model, with 16 more boxes to be filled in. This time it’s a simpler exercise as there is no need for a spreadsheet. An explanation of each field is presented alongside the percentage figure indicating an increase in citizens’ desirability to live, work, or vacation at the resort, as before a “Higher”, “Ok “or “Lower” text field is presented, as before if in disagreement be it higher or lower it is preferred if an alternate estimate is in-putted as opposed to a tick or yes.
In general the Locations Butterfly adds up to 120%, so making a property worth over double its value due to its position. Some questions are more specific to residential tastes; some more specific to attracting local residents to shop and visit.
All combine to make the total as both are as relevant as each other.
Please consider not all location exercises may appeal to all people, and appreciate the resort will be carefully designed so entertainment areas are far away from retreat areas.