Develpment Appraisal

Question 1

What is a development appraisal?

Answer 1

A series of calculations to establish the value/ viability/ profitability/ sustainability or a scheme

Based on clients inputs

Question 2

What is a residual valuation?

Answer 2

Most common purpose is to find the market value of a site

Based on market inputs (the rics building cost information service/ QS)

Question 3

What goes into a development appraisal?

Answer 3

GDV - Total Development Costs - site value

GDV = (MR x NIA) / Y

Net Development Value = GDV - Purchasers Cost

Build Costs = 
Site Prep
Construction Costs (GIA)
Professional Fees (10-15%)
Contingency (5-10%)
Marketing (agents 1%, letting 10%, marketing)
Planning (CIL + S106)
Cost of finance (LIBOR)

Developers profit = 15-20%

Question 4

What is an S Curve

Answer 4

An S curve represents money being drawn down in a development

Low costs at start
High construction cost in middle
Low costs at end

Assumes 100% debt