Which factor is important when considering financial feasibility in real estate appraisal?

When considering financial feasibility in real estate appraisal, market demand plays a crucial role. Understanding market demand involves analyzing how much interest there is in a property from potential buyers or tenants. If there is strong market demand for a particular type of property, it indicates that prices may hold up well and that the project is likely to generate a positive return on investment. This demand heavily influences the potential revenue that can be generated from the property, which is a key determinant of whether a project is financially viable.

Other factors like legal restrictions and environmental impact are important in the broader evaluation of a property, but they serve different purposes. Legal restrictions may limit what can be developed or how properties can be used, while environmental impact assessments ensure that projects align with ecological standards. However, these factors primarily relate to compliance and suitability rather than directly affecting the financial feasibility metrics like market demand does. Thus, while they are certainly relevant to the overall appraisal process, market demand is particularly critical in evaluating whether a real estate investment will be financially feasible.