Development Appraisals

Question 1

What is a developers Appraisal?a

Answer 1

Measures viability if a project by working out the profit to a developer

GDV less development costs (including land) = Developers profit

Question 2

What is a residual appraisal?

Answer 2

An appraisal used to work out the land value of a site with planning.

GDV less development costs (including profit) = residual land value

Question 3

Tell me about Financial viability in planning conduct and reporting 2019?

Answer 3

An RICS professional statement-

Need for sensibility analysis
development plan
reporting

Question 4

What is CIL?

Answer 4

Community infrastructure levy- a charge to the local council on large developements. Can provide a charge per m2

Question 5

What is a S106 agreement?

Answer 5

Part of town and county planning act 1990- flexible requirements made by local authority on large developments.

e.g for developments more than 15 houses 40% of housing needs to be affordable units

Question 6

What sort of costs form part of development costs?

Answer 6

Build costs
Prof fees
finance
letting/sale fees
contingency
bank fees
planning obligations

Question 7

why is it important to inspect sites?

Answer 7

Japanese knotweed
Site boundarys
contamination

Question 8

What are different types of analysis you can partake in an appraisal?

Answer 8

Sensitivity analysis- + or - 5-10%
Scenario analysis- complex models when features change
SWOT

Question 9

Whats the current market like?

Answer 9

higher building costs with covid / brexit and more risk

Question 10

Justify your % for professional fees

Answer 10

Broadly speaking I tend to adopt 8% for professional fees. This tends to be acceptable as an wildly adopted average is between 6 and 10 so its in the middle and accounts for all professional fees.

Question 11

What is placemaking?

Answer 11

Strenghthening the relationhship between people and places. through design and use

Question 12

Tell me about the Valuation of development property 1st Edition?

Answer 12

guidance from the RICS on assessing developement properties. has guidance on=

1. Basis of valuation / approach
2. market, residual approach
3. risk analysis and profit
4. inspection

Question 13

How is finance calculated?

Answer 13

varys in rates, will consist of the bank basic rate of finance plus an additional amount for risk (varys from size of development and who is developing)

Question 14

What is an S Curve in development?

Answer 14

Its the theory that as time goes on more funds can be released as more properties are completed/ sold off.

Question 15

What are the three stages of a development programme?

Answer 15

1. Pre construction- site assembly and negotiating contracts
2. Principal construction period- site preparation and main build
3. Post Construction- defects liability period and lead up to sale or letting

Question 16

What is the cashflow approach?

Answer 16

Uses a period by period cashflow to accurately reflect timing of payments. can be useful to budget.

If done i use with argus

Question 17

What are typical issues surrounding development land currently?

Answer 17

Issues getting supplies?

Question 18

What opportunities or strength do you look for in Dev site

Answer 18

planning, access, location to towns or transport

Question 19

Define development

Answer 19

Town & Country Planning Act 1990: “the carrying out of building, engineering, mining or other operation in, on, over or under land, or the making of any material change in the use of any building or other land”

Question 20

what is IRR

Answer 20

Internal rate of return is a time weighted measure of return. Internal rate of return is the annual rate of growth an investment is expected to generate. The higher the IRR the better. Reduce timescales to improve

Question 21

What are the factors which have a significant impact in DA?

Answer 21

Build costs,
high fees,
time scales

Question 22

What was the last DA CPD?

Answer 22

We did a BCIS training course