The Importance of Feasibility Study on real estate development projects

real estate development project

In 2018, the Kiwanis North Shore Housing Society, a non-profit organization, received CAD 10.6 million from BC Housing to develop Lynn Woods, a 106-unit, six-story affordable senior housing project in North Vancouver’s Whiteley Court. By 2019, the property was rezoned for residents aged 65 and older, aligning with Kiwanis’ mission. However, by June 2022, when the project was completed, 61 of the 106 units remained vacant. Despite lowering the age limit to 55, only two additional tenants were found.

The root cause? they built senior housing for low-income groups in an upscale community, only to find out there weren’t many low-income seniors in that area. In another word, the project’s financial and eligibility requirements, imposed by Kiwanis and BC Housing, were mismatched with the local demographics. The grant required 20% of the units to be rented to low-income seniors at CAD 375 per month, with most tenants’ income not exceeding CAD 57,000 annually, and assets capped at CAD 400,000. Yet, in North Vancouver, most seniors’ income and assets were above these thresholds.

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This mismatch underscores a fundamental issue: the development of a senior housing project in a high-income area for low-income groups without a proper market analysis. A basic feasibility study or demographic research could have revealed the lack of demand in this community. Instead, the operators relied on intuition, leading to a costly and avoidable mistake.

What’s even more concerning is that BC Housing, a government agency, approved the project without requiring a feasibility study, or market study at the least, to validate the need for such housing in North Vancouver. The oversight led to the misallocation of taxpayer money, which is supposed to be used efficiently to address housing needs. The lack of accountability in this process only exacerbates the housing crisis, as it highlights how bureaucratic agencies may prioritize their power over the effective use of public funds.

This case serves as a powerful reminder of the importance of conducting comprehensive feasibility studies in real estate development projects. Without them, even projects with the best intentions can result in significant financial losses and missed opportunities to meet actual community needs.