Project Appraisal 

The second step is for us to complete a full development appraisal for your land and stress test all the inputs we are using. Careful management of the financial side of your development is the key to being profitable and this starts with the project appraisal.

 

The project appraisal is an essential tool that allow us to assess the value of a piece of land, site or building which has development potential.

 

It is the essential tool for working out how profitable an opportunity is and how much we can afford to pay for the potential site. The technical term for the project appraisal is the residual method of valuation, as set out by the Royal Institution of Chartered Surveyors (RICS). In simple terms, the residual valuation method is a calculation or formula which gives you the land value or property value as the final output, based on a set of assumptions for revenue and costs. As described in the name of the formula, the land value is the residual value of this calculation. The formula for the residual valuation is as follows:

 

Gross Development Value – (Fees + Costs + Profit + Finance) =

Land Value

 

There are, of course, a lot more complexities which we will be layering onto this and the accuracy and usefulness of a development appraisal is solely based on the quality of inputs used.