Financial Appraisal Flashcards
What is residual valuation?
The basic method used to access the financial viability of a proposed development
What is the calculation for Residual?
Gross development value - development costs
= residual
What is the calculation for finding Developer’s profit?
Gross development value - (Building Costs + land costs)
= Developers profit
How to calculate land cost?
GDV- (BC + DP)
How do calculate GDV?
All added together
How to calculate land costs?
Area m2 x Unit cost £s per m2
What is the letting period?
From complete construction to sell building
What is the pre contract period?
From site aqisition to commence construction
What is the development period?
From aquire site to sell
What is the building contract period?
From commence construction to complete construction
Abnormal development costs include?
Ground treatment works
Extra foundations
Sewage and water mains connections
Treatment of listing buildings
Interest on land money?
Paid upfront so interest paid for whole development period
Interest on build money?
Spend gradually over building contract period so interest is paid incrementally and compounds over the development period
